INVESTMENT AND FINANCIAL PLANNING 2012 TO 2016 IN THE AUTOMOTIVE DIVISION
Based on our current planning, we shall invest a total of €62.4 billion in the Automotive Division in the period from 2012 to 2016. Besides investments in property, plant and equipment, this amount includes additions to capitalized development costs of €11.6 billion and investments in financial assets of €1.0 billion, net of proceeds from asset disposals. Investments in property, plant and equipment will account for €49.8 billion, more than half of which (57%) will be invested in Germany alone. The ratio of capital expenditure to sales revenue in the period from 2012 to 2016 will be at a competitive level of around 6% on average.
At €32.7 billion (roughly 66%), the Group will spend a large proportion of the total amount to be invested in property, plant and equipment in the Automotive Division on modernizing and extending the product range for all its brands. The main focus will be on new vehicles, derivatives and successor models in almost all vehicle classes, which will be based on the modular toolkit technology and related components. This will allow the Volkswagen Group to systematically continue its model rollout with a view to tapping new markets and segments. In the area of powertrain production, we will launch new generations of engines offering further improvements in performance, fuel consumption and emission levels. In particular, the Group is pressing ahead with the development of hybrid and electric motors.
In addition, the Company will make cross-product investments of €17.1 billion over the next five years. Due to our high quality targets and the continuous improvement of our production processes, the new products also require changes to, and additional capacity in, the press shops, paintshops and assembly facilities. Outside the production area, investments are mainly planned for the areas of development, quality assurance, sales, genuine parts supply and information technology.
Planned investment activities will also include expenditure on wind, solar and hydroelectric power, in order to supply our factories with renewable energies.
Our objective is to finance our investments in the Automotive Division using internally generated funds. We expect cash flows from operating activities to amount to €90.7 billion over the planning period. As a result, the funds generated are expected to exceed the Automotive Division’s investment requirements by €28.3 billion, further improving our liquidity position. We expect net cash flow in the Automotive Division to develop positively in 2012 and 2013.
Our planning is based on the structure of the Volkswagen Group at the date when the planning was prepared (September 2011) and already includes Porsche Holding Salzburg. The investments in the MAN Group and in Porsche Zwischenholding GmbH are still accounted for in Group planning using the equity method. The cash outflow for the purchase of the remaining 50.1% interest in Porsche Zwischenholding GmbH is not included in the Group planning.
The joint ventures in China are not consolidated and are therefore also not included in the above figures. These companies will invest a total of €14.0 billion in new production facilities and products in the period from 2012 to 2016. These investments will be financed from the joint ventures’ own funds.
In the Financial Services Division, we are planning investments of €2.2 billion in the period from 2012 to 2016. We expect the rise in leasing and rental assets and in receivables from customer and dealer financing to lead to funds tied up in working capital of €65.8 billion. Roughly 40% of the total capital requirements of €68.0 billion will be financed from gross cash flow. The remaining funds needed will be met – as is common in the sector – primarily through established money and capital market debt issuance programs and customer deposits from the direct banking business.