INVESTMENT AND FINANCIAL PLANNING 2010 TO 2012 IN THE AUTOMOTIVE DIVISION
in € billion
Investments in the Automotive Division will amount to €26.6 billion in the period 2010 to 2012. Besides investments in property, plant and equipment, this total amount also includes additions to capitalized development costs of €5.9 billion as well as investments in financial assets, the change in leasing and rental assets, and proceeds from the disposal of property, plant and equipment totaling €0.8 billion. Investments in property, plant and equipment account for €19.9 billion, around half of which will be invested in Germany alone. As a result of upfront expenditures on new products, powertrains and production facilities, the ratio of capital expenditure to sales revenue in the period 2010 to 2012 will therefore be at a competitive level of around 6% on average.
The Group will spend most of the total amount invested in property, plant and equipment in the Automotive Division on modernizing and extending the product range (€13.3 billion). The main focus will be on new vehicles, successor models and model variants in almost all vehicle classes based on cross-brand modular technology. Thus, the Volkswagen Group will systematically continue its model rollout with a view to tapping new markets and segments. In powertrain production, new generations of engines will be launched with further improvements in performance, fuel consumption and emission levels. Capacity for automatic gearboxes will be adapted to meet the rise in demand.
In addition, the Company will make cross-product investments of €6.6 billion over the next three years. Due to our quality and cost targets, the new products also require changes to the press shops, paintshops and assembly facilities. Beyond production, investments are planned mainly in the areas of development, quality assurance, genuine parts supply and information technology. The construction of the new plant in North America is under way; production is scheduled to start in 2011. The new production facilities in Russia and India are already at the start-up stage. These growth markets will therefore be supplied with locally produced vehicles.
Our aim is to finance investments within the Automotive Division using internally generated funds. For the planning period, we are forecasting cash flows from operating activities of €29.6 billion. The funds generated will therefore exceed the Automotive Division’s investment requirements by €3.0 billion and continue to improve liquidity.
As a 49.9% equity interest, Porsche has been included in the planning as an equity-accounted investment. Suzuki is not yet included in the planning. The joint ventures in China are also not consolidated and therefore not included in the above figures. These companies will invest a total of €4.4 billion in the period 2010 to 2012. These investments will be financed using the joint ventures’ own funds.
Investments totaling €17.1 billion are planned in the Financial Services Division in the period 2010 to 2012, with leasing and rental assets (net of disposals) accounting for €8.1 billion and the increase in receivables from leasing, customer and dealer financing accounting for €8.6 billion*. As is common in the industry, the planned cash flows from operating activities of €8.9 billion will not be sufficient to cover these investments. We will finance the additional capital requirement of €8.2 billion primarily through debt issuance programs in the money and capital markets, and through customer deposits from the direct banking business.
*In contrast to this, changes in leasing and rental assets and financial services receivables are reported in cash flows from operating activities for the first time in the 2009 annual financial statements in accordance with the revised IAS 7.14 and IAS 7.15.