Investment and financial planning

In our current planning for 2017, investments of a total of €18 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 €13 billion. The ratio of capex to sales revenue in 2017 will be at a level of 6–7%. The majority of capex will be spent on new products and the continued rollout and development of the modular toolkit. The focus is on the electrification and digitalization of our vehicles, in particular through the advancement of the Modular Electric Toolkit (MEB). At the same time, primarily the SUV range will be further expanded.

Besides capex, investing activities will include additions of €5 billion to capitalized development costs. Among other things, these reflect upfront expenditures in connection with environmental standards and the extension and updating of our model range.

The investments in our 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.

We anticipate significant cash outflows in 2017 because of expenses from the diesel issue. Cash flows from operating activities are not expected to cover the Automotive Division’s investment requirements. We therefore expect a negative net cash flow in 2017.

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 2017, to be financed from the companies’ own funds.

In the Financial Services Division we are planning lower investments in 2017 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 55% will be financed from the gross cash flow. As is common in the sector, the remaining funds needed will be met primarily through unsecured bonds on the money and capital market, asset-backed securities, customer deposits from direct banking business, as well as through the use of international credit lines.