Audi AG (FRA:NSU) (ETR:NSU), the German automaker, announced its plan to invest €22 billion or $30 billion over the next five years to strengthen its technical competitiveness and leadership in the luxury cars market and obtain further growth.
Audi’s investment to spark growth
The investment of the German automaker is intended for innovations in new models and continuous expansion of its production network globally. Audi AG (FRA:NSU) (ETR:NSU), a subsidiary of Volkswagen AG (OTCMKTS:VLKAY) (ETR:VOW) (FRA:VOW) allocated €16 billion to invest in fixed assets and €6 billion in capitalized development. Last year, the German automaker had €923 million for capitalized development.
The primary competitors of Audi AG (FRA:NSU) (ETR:NSU) such as Bayerische Motoren Werke AG (ETR:BMW) and Daimler AG (ETR:DAI) (OTCMKTS:DDAIF), manufacturer of Mercedez-Benz cars are seeking to attain the top position in the luxury cars market. The latest move of Audi is the largest technical and investment program in the history of the company to increase its ability to compete with its rivals in the industry.
Audi AG (FRA:NSU) (ETR:NSU) already reached its target sales for 2015. The company delivered 1.5 million vehicles this year. According to the automaker, it was able to double its global sales in a single decade. In 2003, the company sold around 769,000 cars per year.
Investment to fuel next-gen engines, concept drives
Last December 16, Rupert Stadler, chief executive officer of Audi AG (FRA:NSU) (ETR:NSU) said, “In 2005, we set ourselves a very ambitious goal, and since then have sparked an unparalleled brand and model initiative. We will continue to write this success story and expand our product range from the current 49 to 60 models. We see a great deal of potential, particularly in the SUV segment and in the especially prestigious full-size category.”
Audi AG (FRA:NSU) (ETR:NSU) will spend more than 50% of planned €22 billion investment in its operations in Ingolstadt and Neckarsulm in Germany. In addition to developing new models and alternative drive concepts, Audi will also invest in next-generation, fuel-efficient engines to be able to meet the strict emission standards and regulations worldwide.
Its parent company, Volkswagen AG (OTCMKTS:VLKAY) (ETR:VOW) (FRA:VOW) is planning to invest €84.2 billion for its brands including Audi over the next five years.