Audi Plans $30.3 Billion in Investments to Challenge BMW

Photographer: Jason Alden/Bloomberg

Visitors are seen reflected in the roof of a show hall as they view Audi automobiles at the 65th Frankfurt International Motor Show in Frankfurt in a Sept. 11, 2013 file photo. Close

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Photographer: Jason Alden/Bloomberg

Visitors are seen reflected in the roof of a show hall as they view Audi automobiles at the 65th Frankfurt International Motor Show in Frankfurt in a Sept. 11, 2013 file photo.

Volkswagen AG (VOW)’s Audi unit, the world’s second-biggest maker of luxury cars, plans to spend 22 billion euros ($30.3 billion) through 2018 developing new models and expanding production to gain the premium segment’s top spot.

About 15.4 billion euros, or 70 percent of the total, will be invested in new cars and sport-utility vehicles along with developing technology, the Ingolstadt, Germany-based carmaker said today in a statement. Audi targets 2 million deliveries annually after achieving a goal of selling 1.5 million autos in 2013, two years ahead of its original plan.

“We are now decisively steering toward our next milestone,” Chief Executive Officer Rupert Stadler said in the statement. “This is why we’re keeping our foot on the gas pedal regarding investments.”

The budget is equivalent to spending 4.4 billion euros a year, an increase from a previous plan that called for investing 4.3 billion euros annually on new models and expanding production capacity. The VW unit aims to overtake Bayerische Motoren Werke AG (BMW) as the world’s biggest luxury-car producer by the end of the decade. Audi’s expansion is part of Volkswagen’s 84.2 billion-euro investment program to beat Toyota Motor Corp. (7203) and General Motors Co. (GM) in global sales.

Volkswagen rose 1.3 percent to 204 euros at the close in Frankfurt. The stock has been trading at the highest price since November 1992 for about a week, valuing the carmaker at 92.5 billion euros.

BMW Expansion

BMW is seeking to fend off challenges by Audi and Mercedes-Benz with its own expansion. The Munich-based carmaker is introducing 25 models in 2013 and 2014 including 10 vehicles, such as the Rolls-Royce Wraith, that have no predecessor. BMW said in November that its spending will exceed targets this year and continue at a high rate in 2014.

Daimler AG (DAI)’s Mercedes, which ranks third in the luxury segment, plans 13 all-new models by the end of the decade, while Audi is widening its SUV lineup. Stuttgart-based Daimler said today that it will invest 200 million euros in a vehicle-technology and testing center in the southern German town of Geisingen-Immendingen.

Audi plans to increase its product range to 60 models by 2020 from about 49 currently. The third generation of its TT coupe is scheduled to go on sale next year, joining newly introduced electric- and natural gas-powered variants of the A3 Sportback, the carmaker said today. Audi will also add to its SUV lineup with the subcompact Q1 in 2016.

To meet anticipated demand for its vehicles, the manufacturer is adding production in China, Brazil and Mexico, in addition to upgrading its German plants.

“With this investment program, we are launching our next stage of growth,” Chief Financial Officer Axel Strotbek said in the statement.

To contact the reporter on this story: Tom Lavell in Frankfurt at tlavell@bloomberg.net

To contact the editor responsible for this story: Chris Reiter at creiter2@bloomberg.net

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