VW Preserves Huge Spending Plans for Plants, Product

Volkswagen AG says it will delay construction projects to protect its plan to invest €84 billion on factory upgrades and new products over the next five years.

More than two-thirds of the total budget will be devoted to making its vehicles and factories more efficient, according to the company. But VW also says it will cut spending on property, new facilities and equipment by about €500 million annually. At the same time, it will increase efforts to make existing operations more productive.

Bloomberg News notes that in the previous six years VW has more than doubled its global factory count, in part by acquiring Ducati, MAN, Porsche and Scania. The carmaker signaled two months ago that it would take steps to cut costs and improve profitability.

Last month VW reported a third-quarter group operating profit of €2.8 billion, up 20% from the same period in 2012. The company expects no advance in full-year profits this year but predicts an improvement in 2014.

VW says its unconsolidated ventures in China will continue separate plans to invest €18 billion on plants and product between now and 2018. That spending program is being funded directly by the partnerships.