Volkswagen AG, the largest European automaker, said today its spending plans for the car business to help achieve the goal of the German company to overtake Toyota Motor Corp. sales and profitability.
20-member of the VW supervisory board will meet to discuss investment including the cost of plants, vehicles and developments affecting the automaker nine brands, said three people briefed on the matter who declined to be identified because the meeting is private.
Wolfsburg, Germany-based VW plans traditionally described rolling medium-term spending in November, with the most recent projection for 25.8 million euros (35 billion) in investments in the automobile business in the three years to 2012. The Board also plans to discuss the progress of cooperation between Scania AB and MAN truckmakers SE, one of the people, he said.
"VW is necessary to adjust spending plans to changing economic conditions and technology factors, but their basic commitments to major markets are already underway," said Frank Biller, an analyst at Landesbank Baden-Württemberg in Stuttgart, Germany who recommends buying shares in VW.
Volkswagen's preferred shares traded at € 118.70, or 0.4 percent, at 10:43 am in Frankfurt. The stock has risen 82 percent this year, the best performer on the German benchmark index DAX.
"The steps"
CEO Martin Winterkorn is directed to a second consecutive year of record deliveries which adds about 70 models, including the new compact Audi A1 and VW Touareg SUV successors and Sharan family van. VW plans to sell more than 8 million cars in 2012 and 10 million in 2015, three years before its official target of 2018, a person familiar with the matter said last month.
"They are taking the necessary measures in lucrative markets such as China, India and the U.S.," said Joerg Bode, one of the two members of the VW supervisory board, representing the German state of Lower Saxony, which owns 20 percent of the automaker and has veto rights. "They committed themselves to ambitious targets in the strategy for 2018."
VW declined to comment before the board meeting today.
The supervisory board is also set to vote on extending the contract of acquisition chief Francisco Javier Garcia Sanz, to deliberate on VW loans to companies closely linked, and updated information on exchange rate developments and the situation of VW operations in China, India and Brazil, one of the people, he said.
Net liquidity
In late September, Volkswagen reported net cash of 19.6 million euros. Of the € 25800000000 budgeted last November for three years until 2012, € 13,300,000,000 go to the creation of vehicles and the redesign of existing ones.
Spending targets to be announced today may cover a period exceeding three years, one person said.
Toyota, the largest automaker in the world, with a budget of 670 billion yen ($ 8 million) for plant and equipment spending in its fiscal year ending March 2011 and 760 billion yen for research and development. Toyota reveals no spending plan in the medium term.
Volkswagen's board decided in September to produce the Amarok pick-up in Hanover, Germany-based plant from mid-2012, adding a second model, besides the van line T5 at its German plant third largest. VW's initial plans are to build about 40,000 Amaroks in Hannover for the European market. The Amarok, which is sold throughout the world except the U.S., is currently made only in the VW factory in Argentina.
Tiguan compact
VW is also increasing production of vehicles and components in some of its 10 factories located in Germany. The automaker will increase the daily production of the Tiguan compact SUV at its main Wolfsburg plant to 1,000 units next year from 750 and gearbox building more two-way at a factory in Kassel, the source said. About 400 temporary workers at both plants will be offered permanent jobs to meet growing demand, according to the personnel director Jochen Schumm.
This year, VW announced plans to add two more factories in China, bringing the total in the world's largest market for automobiles to 11 as part of an investment of 6000 million euros to double production to 3 million is not present within four years. VW also will open a plant in Chattanooga, Tennessee, next year to supply the U.S. market and is expanding capacity in Russia.
The board will not decide on measures to promote a possible combination of Scania and MAN, the people said. Scania November 15, said he is considering a merger with MAN to create the largest European manufacturer of commercial vehicles. VW owns 46 percent of Scania and MAN's 29.9 percent.
The board also shall not extend the contract now CEO Winterkorn said the source. The contract, which expired at the end of 2011, may be extended at the next meeting in February, the people said.
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