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Audi Budgets $17 Billion for Cars, Factories to Catch BMW

By Chris Reiter
December 27, 2012 10:35 AM EST 2 Comments
Audi Plans to Spend $17 Billion on Expansion in Pursuit of BMW
Audi Plans to Spend $17 Billion on Expansion in Pursuit of BMW

Audi, the world’s second-largest maker of luxury vehicles, plans to spend 13 billion euros ($17 billion) through 2016 to develop new cars and expand production capacity as it pursues Bayerische Motoren Werke AG (BMW)’s sales lead.

The Volkswagen AG (VOW) unit budgeted more than 10.5 billion euros to develop vehicles and technologies, including lightweight auto design and electric powertrains, as part of the investment program, the Ingolstadt, Germany-based carmaker said today in a statement. The spending includes funds for expanding production at its factory in Hungary, adding capacity in China and building a new plant in Mexico.

“We will keep investing large sums to pursue our growth strategy,” Chief Financial Officer Axel Strotbek said in the statement. “The expansion of our global manufacturing infrastructure will help us to continue growing.”

Audi aims to sell at least 2 million cars a year and overtake BMW by the end of the decade. The brand’s expansion is part of Volkswagen’s goal to become the world’s largest automaker by 2018. The Wolfsburg, Germany-based manufacturer plans to spend 50.2 billion euros on its auto division, including Audi, through 2015.

BMW is expected to strengthen its dominance of the luxury- car industry next year. The Munich-based carmaker will increase sales 4.6 percent to 1.54 million vehicles in 2013, beating Audi’s 1.1 percent growth to 1.44 million autos, according to estimates from industry researcher IHS Automotive.

Record Sales

With the debt crisis depressing demand in Europe, Germany’s luxury-car makers have maintained growth by selling vehicles in the U.S. and China. BMW, Audi and Daimler AG (DAI)’s Mercedes-Benz are all targeting record sales this year, while mass-market competitors in Europe are bracing for the lowest sales in the region in 17 years.

Volkswagen shares advanced 1 percent to 172.65 euros at 4:32 p.m. in Frankfurt. BMW rose 1 percent to 73.41 euros and Daimler advanced 0.8 percent to 41.90 euros.

In November, the BMW brand increased deliveries 26 percent to 145,452 cars and sport-utility vehicles. That compares with growth of 11 percent to 123,600 deliveries at Audi and 5.7 percent to 120,346 vehicles at Mercedes.

Audi is seeking to boost sales next year by rolling out variants of the A3 compact, including a sedan version. BMW is countering with the introduction of the new 4-Series coupe and the i3, its first electric car.

Mercedes, which was passed in sales by Audi last year, has also set its sights on overtaking BMW. The Stuttgart, Germany- based carmaker will revamp its flagship S-Class sedan and introduce the CLA compact four-door coupe. IHS forecasts Mercedes will retake the No. 2 spot next year, with sales of 1.46 million vehicles.

To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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