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Volkswagen’s (VLKAY) MAN to Invest $2.8B in Plant Upgrade

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Per Reuters, Volkswagen AG’s VLKAY commercial-vehicle division MAN reported that it will be investing €2.4 billion ($2.8 billion) to upgrade its plants in Europe, Asia and Africa by 2020. The upgrade will be done in an effort to boost profits and revamp production facility.

In order to challenge its competitors like Daimler AG DDAIF in the global truck business, Volkswagen has been integrating its MAN and Scania divisions to share development of engines, transmissions, emissions-treatment systems and axles.

Of the total investment, €1.1 billion will be spent on a new paint shop for drivers’ cabins and research and development facilities at MAN’s Munich headquarters. The division has production sites across three European countries. Also, it has presence in Russia, South Africa, India and Turkey.

Volkswagen AG Price and Consensus

Per management, it will invest a huge sum on electric mobility with battery-powered buses, expected to be unveiled in 2018.

In October, Volkswagen announced plans to invest €1.4 billion ($1.7 billion) over the next five years to develop electric powertrains for its trucks and buses, autonomous systems and cloud-based software.

Price Performance

The stock has gained 4.9% in the last 30 days, outperforming the 2% rise of the industry it belongs to.




Zacks Rank & Key Picks

Both Volkswagen and Daimler carry a Zacks Rank #3 (Hold).

A few better-ranked companies in the auto space include American Axle & Manufacturing Holdings, Inc. AXL and Navistar International Corporation NAV, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Volkswagen has an expected long-term growth rate of 12.3%.

Daimler has an expected long-term growth rate of 2.8%.

American Axle has an expected long-term growth rate of 8.1%.

Navistar has an expected long-term growth rate of 5%.

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