VW Group: €62.4-Billion Spend in Next Five Years

There are some companies that are interested in leadership.

There are some companies that are interested in leadership. There are some companies that have serious skin in the game. Those in the first group may talk a good game. Those in the second group are dedicated to making things happen.

Volkswagen Group is in the latter. As Dick Cheney might put it: Big time.

Today Prof. Martin Winterkorn, CEO of Volkswagen Aktiengesellschaft announced that between 2012 and 2016 the company will be investing €62.4-billion in the Automotive Division. As of today, that’s $85.95-billion.

“The Volkswagen Group,” Winterkorn said, “is investing a record amount in forward-looking projects to achieve its goal of becoming the world’s best automobile manufacturer in economic and ecological terms.”

Note well the words the and best.

1. There’s no equivocation

2. This isn’t biggest, it is the best.

And while some people might think that the concentration on things like high miles per gallon, low emissions, and alternative powertrains are something that people in Washington, DC, are uniquely interested in (well, people in California get the knock, too), the word from Wolfsburg is: “Top of the agenda for us are investments in environmentally friendly, sustainable models and drives.”  This is real, not hot air.  And if you want to be competitive in the 21st century, then this is certainly the direction to take.

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VW invested over $1-billion in Chattanooga for the production of the Passat.

The majority of the money--€32.7-billion—will be spent on plant, equipment and property. For example, they’re going to spend €100-million on the Wolfsburg plant to improve the flexibility of the body shop.

There will be €17-billion spent on what’s called “cross-product investments,” not only for stamping, painting, and assembly, but also for development, quality assurance, information technology, and other areas.

While some people might think that this is simply good for VW and its suppliers, think again: If VW is going to be this competitive, then anyone who really wants to stay in the game is going to have to make some serious investments, as well.

Otherwise, it’s just talk.