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Volkswagen to step up investment and aim for world’s top auto maker

By SYF77 on 25 Sep 2011

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Volkswagen will increase its investment in the coming five years as it sets its sight to overtake General Motors and Toyota as the world's largest auto maker within the next 10 years. Europe's largest car maker aims to sell more than 10 million vehicles by 2018 and achieve a pre-tax profit margin of at least 8 percent, which would equate to a return on investment in their core Automotive Division of over 16 percent.

Although VW's supervisory board meets every autumn to decide on the rolling investment plan, this year's 62.4 billion euros plan represents a significant jump compared with the 51.6 billion euro investment over five years targeted last November. "The overall figure sounds spectacularly high, but one has to remember that 4 to 5 percent capital expenditure-to-sales ratios are relatively normal in the industry," said UniCredit analyst Georg Stuerzer, pointing to a figure that has fluctuated between 4.6 and 6.6 percent at VW between 2007 and 2010. According to data from annual reports, VW's capital expenditure at its core Automotive Division amounted to 5.0 percent of sales last year, less than the 6.0 percent rival Daimler invested in its Mercedes-Benz cars division.

Volkswagen met a setback in its bid to dominate the industry when Suzuki Motor said that it wanted to end an alliance that would have boosted the German group's small-car presence in India. In addition, VW also called off a merger with financial holding Porsche SE this year because of legal issues and is now examining other options to integrate the holding's 51 percent stake in Porsche sports cars. In its bid to be world’s no 1, let’s hope that VW will also ensure that quality is not compromised.

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Written by SYF77
I have been a car fanatic since 1989, when my father was changing our family car then to a Toyota Corolla 1.6 GL fitted with a Twin Cam 16 valve engine that was carburetor-fed, a big deal back in those days. The automobile technology and industry fascinates me and I hope to broadcast these interesting developments to everyone out there through this blog.

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