Investment and financial planning
To meet people’s needs for individual, sustainable, fully connected mobility and thus increase the Volkswagen Group’s future viability, we will continue to mobilize our strengths in innovation and technology and push the Volkswagen Group’s transformation into a software-centric mobility provider while leveraging our economies of scale and maximizing synergies.
In our current planning for 2022, most of the capex (investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs) will be spent on new products and the electrification of our model portfolio as well as further development of the modular toolkits, such as the all-electric platform for our volume brands – the Modular Electric Drive Toolkit (MEB) – and those for our premium and sports brands – the Premium Platform Electric (PPE) –, which are currently being rolled out throughout the Group. In addition, the Scalable Systems Platform (SSP) marks the development of a successor platform, which will bundle the requirements of the volume, premium and luxury brands and generate high levels of synergy in the future. We will also focus on the growing digitalization of our vehicles and sites and increase our capital expenditure on these. Moreover, we are investing in the gradual conversion of our locations for the production of electric vehicles and in the creation of battery manufacturing capacity with the aim of establishing a battery supply chain under our own control. The Automotive Division’s ratio of capex to sales revenue is expected to fluctuate around a level of around 5.5 %.
Besides capex, investing activities will also cover additions to capitalized development costs. Among other things, these reflect upfront expenditures in connection with updating the model range as well as electrification and digitalization. Also included are the services of CARIAD, which is developing a standardized operating system for Group brand vehicles, along with other projects.
With the investments in our facilities and models, as well as in the development of electric drives and modular toolkits and in digitalization, we are laying the foundations for profitable, sustainable growth at Volkswagen. These investments also include commitments arising from decisions taken in previous fiscal years.
We aim to finance the investments in our Automotive Division from our own capital resources and expect cash flows from operating activities to exceed the Automotive Division’s investment requirements. For 2022, we anticipate that cash outflows resulting from the diesel issue will rise and mergers and acquisitions will be on a level with the previous year. Including any cash outflows in connection with the EU antitrust proceedings against Scania, we expect the net cash flow to be in the same range as in the previous year.
In 2022, net liquidity in the Automotive Division is anticipated to be up to 15 % higher than the previous year’s level.
These plans are based on the Volkswagen Group’s current structures.
Our equity-accounted joint ventures in China are not included in the figures above. For 2022, these joint ventures plan to invest in e-mobility, further optimization of the model portfolio, the development of new mobility solutions and digitalization. Their capex will probably exceed the 2021 level and be financed from the companies’ own funds.
In the Financial Services Division, we are planning higher investments in 2022 than in the previous year. We expect the development of lease assets and of receivables from leasing, customer and dealer financing to lead to funds tied up in working capital, of which around half 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 markets, the issuing of asset-backed securities, customer deposits from the direct banking business, and through the use of international credit lines.