VW pledges to spend in drive to be world No 1

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Volkswagen will keep up spending on new and upgraded cars in its drive to become the world’s biggest automaker by 2018, while making savings in other areas to cope with rising costs and a tough economic backdrop.

The German group said on Friday it would invest E84.2bn ($113.4bn) in its automotive division over the next five years. That equates to E16.8bn a year, little changed from the E16.7bn announced last year for 2013-2015.

While spending to meet the group’s emissions targets is up on last year’s forecast, investments in property, plant and equipment are around E500m a year lower, Europe’s biggest carmaker said, pointing to the postponement of some construction projects and better use of capacity.

Investment in product and technologies will be unaffected, Volkswagen added, while its two joint ventures in China – the world’s biggest car market – will continue to invest heavily.

Compared with European rivals Fiat and PSA Peugeot Citroen, VW has weathered the European car market’s six-year slump well, thanks mainly to luxury marques Porsche and Audi, which account for only 15 percent of sales but contributed two-thirds of profits.

But some analysts fear VW’s market share has been bought by heavy discounting, and scepticism is creeping in whether a new manufacturing platform aimed at cutting costs will deliver the promised benefits.

VW, with 12 brands and 105 factories, has a fleet of some 300 models that ranges from budget Skodas and SEATs to buses and trucks carrying the MAN and Scania badges.