FRANKFURT (Reuters) - Volkswagen AG is to invest 85.6 billion euros ($106 billion) in its automotive operations over the next five years on foreign expansion, models and technology to back its quest for global leadership, even as it carries out an austerity drive.
The German group said the bulk of spending will flow into increasingly efficient vehicles and more environmentally friendly production methods, in a move that analysts said shows Volkswagen is not stepping off the gas.
Analysts at Evercore ISI said: "As expected, VW's five-year capex planning has not become a victim of the company's efficiency program which is, among other things, aiming at 5 billion euros of efficiency gains at the VW brand by 2018."
Volkswagen said its capital expenditure will be at a competitive level of between 6 and 7 percent in the period from 2015 to 2019.
Volkswagen Group Chief Executive Martin Winterkorn said: "We will continue to invest ... to become the leading automotive group in both ecological and economic terms with the best and most sustainable products."
Around 41.3 billion euros of the investment plan will go toward developing a range of sports utility vehicles, modernizing part of the light commercial vehicle portfolio and towards developing hybrid and electric drives.
At the same time, investments are also planned in new vehicles and successor models in almost all vehicle classes, which will be based on the modular toolkit technology and related components, the company said in a statement.
VW, which had used resilient profits during the previous European auto slump to expand its footprint in China and North America, reckons it can solve the issue of not cutting back on key projects while saving 5 billion euros.
Volkswagen's Chinese joint ventures will also invest 22 billion euros, the company said.
(1 US dollar = 0.8049 euro)
(Reporting by Andreas Cremer and Edward Taylor; Editing by Kirsti Knolle and David Holmes)