Audi, the luxury car unit of Volkswagen AG, said Friday that it would spend more than it ever has on expansion and new models over the next four years, a demonstration of how Germany’s high-end car makers have retained their financial strength during a crisis that has devastated their European rivals.
Audi said it would invest €22-billion, or more than $30-billion, through 2018, a record for the company. Most of the money will be used to design new models and develop new technology such as more fuel-efficient engines. The company will also expand its international production network as it strives to sell two million models annually by 2015, up from more than 1.5 million this year.
Audi and its German rivals BMW and Mercedes-Benz, a unit of Daimler, have suffered far less from the economic malaise in Europe that has pushed car sales to a 20-year low. As a result, they have been able to continue expanding, in contrast to companies like Fiat of Italy, which has all but stopped introducing new cars under the Fiat brand.
While mass-market car makers including Ford and General Motors’ Opel unit have lost billions of dollars in Europe and have had to close factories, luxury German car makers have been operating at close to full capacity as they serve demand in the United States and China. Even in Europe, German car makers have had less drastic sales declines than mass-market car brands, in part because the economy in their home market has remained strong.
“We are launching our next stage of growth,” Axel Strotbek, a member of the Audi management board responsible for finance and organization, said in a statement.
Audi, which this year has accounted for 40 per cent of the profit of its parent company, has been trying to overtake BMW as the market leader in the high-end car market. BMW sold nearly 1.8 million cars through November, including the Mini and Rolls-Royce brands. Audi passed the 1.5 million-mark this year in early December.
Strotbek said 70 per cent of the new investment would go to new Audi vehicles, including an expansion of the product line to 60 models by the end of the decade, from 49 currently. More than half of the money will be invested in Germany at the company’s facilities in Ingolstadt in Bavaria and Neckarsulm, in southwestern Germany, north of Stuttgart.
Audi, which has been trying to expand U.S. sales, is building the first Audi factory in North America in San José Chiapa, Mexico. The company plans to produce the Q5 SUV in Mexico beginning in 2016. Audi also said it was close to beginning production at a new plant in Foshan, China, the company’s second plant in the country.
Some of the new investment will be used to expand the company’s worldwide work force of nearly 70,000. Audi, like all car makers under regulatory pressure to cut emissions and increase fuel efficiency, said it was particularly interested in people with expertise in electric propulsion or building cars that weigh less.
“We want to hire the best in the industry to strengthen areas such as lightweight construction, connectivity and electromobility,” Thomas Sigi, a member of the Audi board responsible for human resources, said in a statement.
Source: theglobeandmail.com
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