FRANKFURT (Bloomberg) -- Volkswagen Group will keep pouring money into new vehicles, technology and factories as it chases Toyota for the lead as world's largest automaker.
VW plans to invest 85.6 billion euros ($106 billion) over the next five years, the company said Friday. The plan calls for an increase in average annual spending on auto operations to about 17.1 billion euros a year, compared with 16.8 billion euros under its previous rolling five-year budget.
"We will continue to invest in the future to become the leading automotive group in both ecological and economic terms," CEO Martin Winterkorn said in a statement. "Development costs will remain high in the future as a result of high innovation pressure and increasing demands on the automotive industry."
Analysts said the announcement shows that Europe's biggest automaker is not stepping off the gas even as it carries out an austerity drive.
A VW source told Reuters on Friday that the company is seeking cost savings of around 10 billion euros across the group, which includes the VW, Skoda and Seat mass-market brands and the Audi and Porsche upscale marques. In July, Winterkorn told employees he was looking for 5 billion euros worth of efficiency gains at VW brand by 2017 to close the profit gap with rivals.
VW's capital expenditure planning has not become a victim of the company's efficiency program, Arndt Ellinghorst of Evercore ISI said in a note to investors after the company's investment announcement.