Volkswagen AG’s (VLKAY) Audi division announced that it will make an investment of 22 billion euros ($30.1 billion) for the development of new models, plants and technology over a five-year span till 2018. Thus the automaker expanded its investment plan to 4.4 billion euros per year, from 2.6 billion euros planned in Dec 2011’s budget.
Volkswagen will be allocating 70% of the investment for the development of new models and technology. Of this, more than half the amount is planned for its German sites located in Ingolstadt and Neckarsulm.
Volkswagen has undertaken this strategy to compete with BMW, according to Reuters. The strategic investment will help the automaker to carry out expansion in Mexico, China as well as Brazil. With this, Volkswagen expects sales volume to increase to 2 million cars per year.
Volkswagen believes that this strategy will help it overtake BMW by the end of the decade. Volkswagen also intends to provide tough competition to Toyota Motor Corp. (TM) and General Motors Co. (GM), and plans to capture the position of the leading global automaker from them by 2018.
Volkswagen has been giving stiff competition to General Motors in China, the world’s largest automobile market. Reportedly, both the automakers have crossed sales volume of 3 million units in the nation, with a few days left for year end.
However, Volkswagen achieved the milestone a week earlier than General Motors. Thus, the German automaker is expected to beat the American auto giant, in terms of total sales in China in 2013. This is for the first time in nine years that Volkswagen will surpass the sales of General Motors in China. This will make Volkswagen the leading foreign automaker in the nation.
Currently Volkswagen carries a Zacks Rank #3 (Hold). Other stocks in the automobile sector worth considering include Toyota and Honda Motor Co., Ltd. (HMC). Both stocks carry a Zacks Rank #2 (Buy).
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