VW to invest 86.1 BILLION dollars
09-19-11, 08:43 AM
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VW to invest 86.1 BILLION dollars
Volkswagen AG (VOW) will invest a record 62.4 billion euros ($86.1 billion) over the next five years to underpin its goal of becoming the world’s largest carmaker.
The supervisory board voted today to approve the spending on plants, vehicles and research and development for the carmaker’s nine brands, the Wolfsburg, Germany-based company said in a statement. VW’s Chinese joint ventures, which are not consolidated, will invest another 14 billion euros through 2016.
VW is expanding in China, its largest market, as part of a broader plan to leapfrog Toyota Motor Corp. (7203) and General Motors Co. (GM) and become the world’s biggest carmaker by 2018. The effort hit two roadblocks in the past week as a merger with Porsche SE planned for this year was delayed and Suzuki Motor Corp. (7269) said it wants to dissolve its 20-month-old alliance.
“VW has its sights firmly pegged on future growth,” said Stefan Bratzel, director of the Center of Automotive Management in Bergisch-Gladbach, Germany. “They’re broadening their presence in lucrative markets like China and Latin America and optimizing spending on future technologies. After the latest setbacks, the message is VW is more determined than ever.”
Volkswagen preferred shares rose as much as 2.20 euros, or 2 percent, to 114.65 euros and were up 1.3 percent as of 4:03 p.m. in Frankfurt trading. The stock has dropped 6.2 percent this year, valuing the carmaker at 49.9 billion euros.
The supervisory board voted today to approve the spending on plants, vehicles and research and development for the carmaker’s nine brands, the Wolfsburg, Germany-based company said in a statement. VW’s Chinese joint ventures, which are not consolidated, will invest another 14 billion euros through 2016.
VW is expanding in China, its largest market, as part of a broader plan to leapfrog Toyota Motor Corp. (7203) and General Motors Co. (GM) and become the world’s biggest carmaker by 2018. The effort hit two roadblocks in the past week as a merger with Porsche SE planned for this year was delayed and Suzuki Motor Corp. (7269) said it wants to dissolve its 20-month-old alliance.
“VW has its sights firmly pegged on future growth,” said Stefan Bratzel, director of the Center of Automotive Management in Bergisch-Gladbach, Germany. “They’re broadening their presence in lucrative markets like China and Latin America and optimizing spending on future technologies. After the latest setbacks, the message is VW is more determined than ever.”
Volkswagen preferred shares rose as much as 2.20 euros, or 2 percent, to 114.65 euros and were up 1.3 percent as of 4:03 p.m. in Frankfurt trading. The stock has dropped 6.2 percent this year, valuing the carmaker at 49.9 billion euros.
Is VW stupid for promising to tie up all its money at once or brilliant for ripping the band aid off at once?
09-19-11, 08:55 AM
#2
To be the biggest, they have to provide the best.
I don't think their products are "The Best", especially when you look at their bread-and-butter products like the Jetta. They have the most variety when combining all makes, but their niche/halo products won't make them the #1 volume worldwide seller.
I don't think their products are "The Best", especially when you look at their bread-and-butter products like the Jetta. They have the most variety when combining all makes, but their niche/halo products won't make them the #1 volume worldwide seller.
09-19-11, 07:56 PM
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I still don't understand VW's choice to make such a goal so public. It sends the wrong message, and should never be the main goal of an automaker. Toyota never once stated their desire to be #1. Being #1 has its benefits, but it perhaps comes with more negatives (as GM and Toyota can tell you). Quality control becomes more difficult (considering quality has always been VW's downfall, being bigger could be disastrous). It also makes you a big target. Competitors focus on taking shots at you, and lawsuits always follow the biggest of an industry the most.
The only way VW becomes top dog, is if they trick enough people who don't care about reliability, into buying their product.
The only way VW becomes top dog, is if they trick enough people who don't care about reliability, into buying their product.
09-20-11, 08:12 AM
#7
I still don't understand VW's choice to make such a goal so public. It sends the wrong message, and should never be the main goal of an automaker. Toyota never once stated their desire to be #1. Being #1 has its benefits, but it perhaps comes with more negatives (as GM and Toyota can tell you). Quality control becomes more difficult (considering quality has always been VW's downfall, being bigger could be disastrous). It also makes you a big target. Competitors focus on taking shots at you, and lawsuits always follow the biggest of an industry the most.
The only way VW becomes top dog, is if they trick enough people who don't care about reliability, into buying their product.
The only way VW becomes top dog, is if they trick enough people who don't care about reliability, into buying their product.
ALL of the European media followed up and wrote stories about "big and great" VW.
http://www.reuters.com/article/2009/...53G0L420090417
I know Toyota dealers didnt like that Toyota did not respond in Europe, as this was just .. crap, as Toyota deliveries for the year were over 1million more than VW, yet all the media run the stories fueled from PR from Wolfsbourg.
http://www.guardian.co.uk/business/2...rgest-carmaker
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