Investment and financial planning

In our current planning for 2016, investments of a total of €15 billion will be made in the Automotive Division.

Scheduled capex (investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs) will amount to approximately €12 billion, down on the figures of the previous planning round. The ratio of capex to sales revenue in 2016 will be at a level of 6 – 7%. The majority of capex will be spent on new products, the continued rollout and development of the modular toolkit and the completion of ongoing capacity expansion. These relate, for example, to product start-ups such as the next generation of the Golf and the Audi Q5, the new Crafter production facility in Poland plus upfront investments for the modular electrification toolkit. Roughly 50% of capex will be made at the Group’s 28 locations in Germany.

Besides capex, investing activities will include additions of €5 billion to capitalized development costs. Among other things, these reflect upfront expenditures in connection with compliance with environmental standards and the extension and updating of our model range. Activities will focus in particular on the rapid advancement of electric drives in the Volkswagen Passenger Cars, Audi and Porsche brands.

The investments in new facilities and models, as well as in the development of alternative drives and modular toolkits, are laying the foundations for profitable, sustainable growth at Volkswagen. These investments also include commitments arising from decisions taken in previous fiscal years.

In March 2016, the sale of the leasing and fleet management company LeasePlan Corporation N.V. to a syndicate of investors was concluded. This transaction resulted in a positive effect of €2.2 billion on the Automotive Division’s investing activities.

We intend to finance our investments in the Automotive Division using internally generated funds and expect cash flows from operating activities to exceed the Automotive Division’s investment requirements. As a result of the effects of the emissions issue, net cash flow in the Automotive Division will probably be significantly lower than in the previous year. This does not include cash outflows for the legal handling of the emissions issue.

These plans are based on the Volkswagen Group’s current structures. They do not take into account the possible settlement payable to other shareholders associated with the control and profit and loss transfer agreement with MAN SE. Our joint ventures in China are not consolidated and are therefore also not included in the above figures. These joint ventures will invest €4 billion in capex in 2016, to be financed from the companies’ own funds.

In the Financial Services Division we are planning higher investments in 2016 than in the previous year. We expect the growth in lease assets and in receivables from leasing, customer and dealer financing to lead to funds tied up in working capital, of which around 45% will be financed from the gross cash flow. As is common in the sector, the remaining funds needed will be met primarily through asset-backed securities, customer deposits from direct banking business, unsecured bonds on the money and capital market as well as through the use of international credit lines.