Audi raises stakes on global scale to balance ongoing losses in Europe

Monday 31 December 2012, 11:28 AM by

Luxury car manufacturer Audi has announced global expansion in order to counter the continuous losses incurred by the carmaker in Europe. The majority owned subsidiary of German auto giant Volkswagen AG is planning to invest $17 billion in a bid to introduce new cars and relevant equipment until 2016. All the same, another key player in the global scene, Ford Motor Company will also invest $773 million to revise its Dearborn Stamping Plant apart from adding four press line for the production of its next-generation trucks falling under the F-series. Ford will also refurbish its Michigan Assembly Plant with a mission to boost the sales of small cars.

Audi, which is the second largest seller of luxury vehicles in the world, plans to use the funds to expand production at its plant in Hungary, which will raise the capacity in China, apparently a bustling market for luxury cars. In addition, the automaker also plans to build a new production plant in Mexico. Development of new cars and technologies, which will include lightweight auto design, will also be a primary motive in the overall expansion plan.

Axel Strotbek, CFO, Volkswagen, remarked on the expansion strategy, “We will keep investing large sums to pursue our growth strategy. The expansion of our global manufacturing infrastructure will help us to continue growing.” It is noteworthy that Volkswagen AG is working in the direction of being the largest car manufacturer globally by the year 2018. Target for Audi, which is a highly significant subsidiary, is to roll out at least 2 million cars per year by the stipulated time.

With this move, Audi will try to outshine the sales numbers of BMW, which is also a German auto manufacturer, by the end of 2020. On the other hand, BMW also has plans to hike the sales by 4.6 percent to 1.54 million units in the coming year. Mercedes, whose sales had been surpassed by Audi last year, is also eyeing to take on BMW. The Stuttgart, Germany-based car giant will overhaul its flagship S-Class sedan and also launch the CLA compact four-door coupe.

In spite of the ongoing losses in Europe, the three German luxury car makers Audi, BMW and Mercedes-Benz have been able to sustain sales growth percentages by increased sales in China and United States. In fact, these investments will enable them to considerably broaden the lead over PSA Peugeot Citroen and Fiat, both of which have delayed their engine technologies and other upgrade plans owing to the slowdown in Europe.

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