Audi to invest as Volkswagen cuts spending

Audi plans to keep capital spending stable in 2016 even as parent Volkswagen reins in investment across its 12 automotive brands in the wake of the diesel-emissions cheating scandal.

The luxury-car division, the biggest contributor to Volkswagen’s earnings, has earmarked some €3.3bn in spending for next year, in line with the 2015 total.

Audi said yesterday investments in 2016 will exceed €3bn as the company introduces a compact sport utility vehicle and develops an electric car.

Audi’s plan underscores Volkswagen chief executive Matthias Mueller’s struggle to safeguard the group’s strategically important projects while preparing for billions of euro in financial fallout from the scandal.

Volkswagen decided last month to invest €12bn in factories, equipment and model development next year, down from an earlier €12.9bn budget.

Both the parent and Audi have provided only annual spending plans.

Volkswagen is Europe’s biggest carmaker and its top seller.

That division also accounts for the bulk of the 11 million vehicles affected by the diesel emissions test-cheating software that came to light in September, though cars from Audi and, to a lesser extent, Porsche are also involved.

Those two upscale marques generated about two-thirds of group operating profit in the first half of 2015.

Audi said it will also begin deliveries of the compact Q2, a model previously referred to as the Q1, and a new version of the mid-size Q5 SUV.

The division also reiterated a commitment to introduce a purely battery-powered vehicle by 2018 as part of an expansion of its line-up to about 60 models by 2020 from 52 currently.

That contrasts with Mr Mueller’s effort to scale back group-wide product offerings from about 300 main vehicles and variants, largely at the mass-market brands.

“With the current investment program, we obviously want to enhance the brand’s strong position,” said Audi chief financial officer Axel Strotbek.