Volkswagen's Audi to step up investments in 2015-19 on models, plants

[December 27, 2014]  BERLIN (Reuters) - Volkswagen's <VOWG_p.DE> flagship Audi division is to increase spending on new models, plants and technology through 2019 to push its goal of surpassing German rival BMW as the world's largest luxury-car manufacturer.

Audi, which contributes 40 percent of operating profit at Europe's biggest automotive group, said on Saturday it will push up investment in car-making operations by 2 billion euros ($2.44 billion) to a record 24 billion euros over the next five years.

Seventy percent of spending will be assigned to developing new models and technologies such as emission-cutting plug-in hybrid vehicles, Audi said. The brand is also working on purely electric cars to catch up with BMW <BMWG.DE> and Tesla Motors <TSLA.O>.

More than half of the funds will be spent on Audi's two German factories in Ingolstadt and Neckarsulm which accounted for half the carmaker's nine-month output of 1.34 million autos, Audi said, confirming a Reuters story.

"We place top priority on sustainable growth," Chief Executive Rupert Stadler said. "That’s why we are making large investments in the innovative areas of electric mobility, connectivity and lightweight construction."

Audi, the world's second biggest luxury automaker, is aiming to expand its model range to 60 from currently 50 by 2020 and is spending over 1 billion euros on new factories in Mexico and Brazil.

Ingolstadt-based Audi said on Saturday it will hire another 850 workers in Mexico next year where the Q5 sport-utility vehicle will be assembled from 2016.

Under its previous budget drawn up a year ago, Audi announced investments of 22 billion euros over the 2014-18 period. Parent VW in November unveiled auto investments of 85.6 billion euros through 2019, slightly more than a year earlier, even as the carmaker is pushing cost cuts at its core brand.

(Reporting by Andreas Cremer)

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