Volkswagen wants to invest 180 billion euros within five years

Berlin The premium brands around Audi and Porsche and the leasing division secured a good result for the Volkswagen Group in the past year despite the continued lack of chips. As the car manufacturer announced on Tuesday morning, the high-yield subsidiaries can transfer an amount in the double-digit billions to the account at the Wolfsburg headquarters.

At the same time, VW wants to increase its investments in new electric models and the digitization of its vehicles. In total, Europe’s largest car manufacturer is planning investments of 180 billion euros between 2023 and 2027. In the previous planning round it was 159 billion euros.

More than two thirds of the announced investment volume will flow into the future fields of digitization and electrification. In the last five-year plan, it was significantly less at 56 percent. By 2025, every fifth vehicle sold by the group should be equipped with a purely electric drive. Around 15 billion euros go to the battery subsidiary PowerCo and to secure its own raw materials.

At the same time, Volkswagen must invest in the latest generation of its combustion engines, the share of which will decrease significantly after 2025.

“2023 will be a crucial year for implementing strategic goals and accelerating the progress of the Group,” said CEO Oliver Blume at the annual press conference in Berlin on the goals for the current year.

>>Read here: In this way, Volkswagen is strengthening its own competencies in electrical production

At the beginning of March, Volkswagen surprised with a comparatively optimistic outlook. Accordingly, sales should increase by ten to 15 percent in view of the high order backlog and the operating return should land in a range between 7.5 and 8.5 percent. In terms of net liquidity, the group is aiming for a value of between 35 and 40 billion euros. Volkswagen received around 20 billion euros from the Porsche IPO last year.

From the point of view of CEO Blume, the expansion of the electrical portfolio was the most important strategic change of the past year. “Battery electric vehicles accounted for a record seven percent of total deliveries. This is an important milestone on which we will build this year with our growing, attractive range of models,” said Blume, who is also the head of Porsche.

VW boss Oliver Blume

“2023 will be a pivotal year to deliver on strategic goals and accelerate the Group’s progress.”

(Photo: dpa)

The optimism spread by the group management in terms of electrical strategy is not necessarily shared on the stock exchange and among investors. “We believe that Volkswagen has largely lost its position as a pioneer in the field of electric technology,” said Patrick Hummel, UBS auto analyst.

Responsible for this is a sluggish implementation of their own strategy. Tesla and Chinese car manufacturers are represented on the market much faster with their new electric models. At the moment, the VW Group is still benefiting from its high order backlog in Europe. But in other important sales regions such as North America and China, there are not well-filled order books.

The planned increase in investments was also met with rejection among investors, traders said on Tuesday. Volkswagen was one of the losers in the leading index Dax: the preferred share was down almost three percent by midday.

Porsche and Audi are better supplied

Last year, Volkswagen benefited from the strong results of its Group subsidiaries Audi and Porsche. The premium group around Audi, which also includes Lamborghini and Bentley, increased sales from 55.9 to 61.8 billion euros. At the same time, operating income increased from 5.9 to 7.6 billion euros, and the return climbed from 10.6 to 12.3 percent.

As in 2021, when semiconductors were missing everywhere in the automotive industry for the first time, the VW Group primarily served Audi and Porsche with chips last year. As a result, both brands were able to keep their sales figures relatively constant – and the income that is delivered to the group accordingly.

Porsche increased its operating return last year from 16.5 to 18.6 percent. The sports car subsidiary had already presented its own balance sheet on Monday.

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The leasing subsidiary VW Financial Services (VWFS) also makes a large contribution to earnings. This created an operating income of 5.7 billion euros, after six billion euros in the previous year. At that time, VWFS had benefited from the particularly high residual values ​​of leasing returns. In the meantime, the residual values ​​are slowly normalizing.

The volume brands, on the other hand, fared significantly worse than Porsche and Audi last year. Volkswagen Passenger Cars achieved an operating return of 3.6 percent, compared to 3.4 percent in 2021. The Skoda return fell from 6.1 to three percent. Seat left the loss zone and booked a small profit of 33 million euros.

Volkswagen had already presented the annual figures for the entire group at the beginning of March. Sales rose by twelve percent to 279 billion euros. Net income after taxes was 15.8 billion euros, which corresponds to an increase of 2.6 percent.

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Shareholders can expect a significantly higher payout. They are to receive a dividend of EUR 8.70 per common share and EUR 8.76 per preferred share, which is EUR 1.20 higher than in the previous year. This increases the payout ratio from 25.4 to 29.4 percent.

More: When will e-cars get cheaper? These models cost less than a corresponding combustion engine.

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