* To spend 84.2 bln euros in autos division from 2014-8
* Lower investment on non-vehicle projects vs last year
* Investments on new, upgraded models unaffected
By Andreas Cremer
LONDON, Nov 22 Volkswagen will keep
up spending on new and upgraded cars in its drive to become the
world's biggest automaker by 2018, while making savings in other
areas to cope with rising costs and a tough economic backdrop.
The German group said on Friday it would invest 84.2 billion
euros ($113.4 billion) in its automotive division over the next
five years. That equates to 16.8 billion a year, little changed
from the 16.7 billion announced last year for 2013-2015.
While spending to meet the group's emissions targets is up
on last year's forecast, investments in property, plant and
equipment are around 500 million euros a year lower, Europe's
biggest carmaker said, pointing to the postponement of some
unspecified construction projects and better use of capacity.
Investment in product and technologies will be unaffected,
Volkswagen (VW) added, while its two joint ventures in China -
the world's biggest car market and the engine of the group's
recent growth - will continue to invest heavily.
"VW is reinforcing cost discipline, with greater emphasis on
core product spending," said M.M. Warburg analyst Marc-Rene
Compared with European rivals Fiat and PSA Peugeot
Citroen, VW has weathered the European car market's
six-year slump well, thanks mainly to luxury marques Porsche and
Audi, which account for only 15 percent of sales but contributed
two thirds of profits so far this year.
But some analysts have expressed concern that VW's market
share gains in Europe have been bought by heavy discounting, and
scepticism is creeping in whether a new manufacturing platform
aimed at cutting costs across the group's brands will deliver
the promised benefits.
With the costs of that platform, as well the discounts and a
stronger euro eroding profits, analysts had expected some cost
cutting on projects not related to model development.
"In times like these, our disciplined cost and investment
management will remain a cornerstone of our activities," VW
Chief Executive Martin Winterkorn said on Friday.
VW, with 12 brands and 105 factories, has a fleet of some
300 models that ranges from budget Skodas and SEATs, through the
VW Golf, Europe's best-selling car, to buses and trucks carrying
the MAN and Scania badges.
However, even with net cash of 16.7 billion euros at the end
of September and a goal of matching last year's record operating
profit, the group faces a battle to overtake Toyota and
General Motors and become world number one by 2018.
VW finance chief Hans Dieter Poetsch said last month he did
not expect a quick rebound in Europe's car market, which
accounted for almost 40 percent of 10-month group vehicle sales,
although auto sales in the region swung back to growth in
September and October.
The Wolfsburg-based company, which is rolling out about 60
new and redesigned models this year, was also dealt a blow last
week by news it was recalling over 2.6 million cars worldwide to
fix a variety of problems.
Almost 60 percent of VW's spending on property, plants and
equipment in the auto division will focus on Germany, it said.
Its Chinese ventures, which are not consolidated, will spend
an additional 18.2 billion euros from 2014 to 2018, it added.
VW shares closed around 0.5 percent lower at 195 euros,
within a broadly flat European blue-chip index.