* Five-year investments could reach 70 bln euros -analysts
* Higher spending may consolidate lead over European peers
* Crisis reinforces need to cut costs -VW board member
By Andreas Cremer
BERLIN, Nov 22 Volkswagen is
expected to increase planned investment in new vehicles and
factories, looking beyond a European slump to its long-term goal
to be the world's largest car maker.
While the multi-brand group is less exposed to austerity-hit
Europe than rivals PSA Peugeot Citroen and Fiat
, finding the cash to achieve its goal is becoming
harder and it has to balance keeping a tight rein on short-term
costs with the need to develop new products.
VW's 20-member supervisory board is due to sign off on new
spending targets for 2013-17 on Friday.
Wolfsburg-based VW is expected to increase spending by 12
percent to as much as 70 billion euros ($89.73 billion) for its
twelve brands over the next five years, compared with 62.4
billion for the 2012-16 period agreed a year ago, analysts said.
That would be a record level, but also represent a slowdown
- the spending target was raised 20.9 pct to 62.4 billion euros
from 51.6 bln euros for the 2011-15 period.
"Pressure to cut costs is definitely higher in such
difficult times, but we must keep up spending to meet our
expansion goals," Peter Mosch, top labour leader of VW's Audi
division and a member of VW's supervisory board, told Reuters.
By stepping up investments on products and technology, VW
could consolidate its lead over stricken Mediterranean peers
Peugeot and Fiat, which have slowed or shelved whole vehicle
programmes, engine technologies and platform revamps while
grappling with high fixed costs in a shrinking European market.
VW's strong sales elsewhere have allowed it to offer
cut-price deals and swell its share of the battered European
market to almost a quarter.
VW spokesman Marco Dalan declined to comment on the
company's new spending plans.
As VW strives to replace Toyota Motor Corp as the
world's number one auto maker no later than 2018, it keeps
increasing its presence outside Europe, building or planning new
factories in markets such as China, Mexico and Russia.
Growing technology needs, foreign expansion and the
integration of sports car maker Porsche and truck maker MAN SE
will make for high levels of spending in the years ahead,
Metzler Bank analyst Juergen Pieper said.
But even with net cash of 9.2 billion euros at the end of
September and an expectation of matching last year's record
operating profit in 2012, VW has to keep a tight rein on costs.
It may delay certain projects but it will keep up
underlying, strategic investments, LBBW analyst Frank Biller
said: "VW will maintain its pretty high pace of spending."
In the short-term, VW is halting production of the Passat
model at a German factory in Emden between Dec. 17 and Dec. 21,
after shuttering the plant for two days in October as part of a
wider move to cut group output by about 300,000 vehicles to 9.4
million cars this year.
Plans by VW's ultra-luxury brands Bentley and Lamborghini to
develop sports utility vehicles (SUV) may be put on hold by the
German parent to save cash, after VW's third-quarter profit
plunged by a fifth, company sources said.
"One definitely has to fight for investments (with parent
VW)," Audi works council boss Mosch said. "It cannot always be
like a request show where everyone makes a wish."
($1 = 0.7801 euros)
(Reporting By Andreas Cremer Additional reporting by Jan
Schwartz in Hamburg; Editing by Helen Massy-Beresford)