Volkswagen (VLKAY) Plans To Invest $3.3B In North America

Per Reuters, Volkswagen (DE:VOWG_p) AG (OTC:VLKAY) has plans to invest more than $3.3 billion to expand its market share in North America, the second largest auto market in the world after China. Starting from 2018, the company plans to utilize this amount to develop and manufacture new models through 2020.

Post Volkswagen’s diesel emission scandal in September 2015, the company has been trying to strengthen its hold in the United States. Per management, the company intends to develop its brand value in the country and aims to achieve break-even in operating profits by 2020.

As part of its plan, Volkswagen will introduce two new models in the United States including the all-new Arteon fastback in 2018. This same year, it will also launch a re-designed edition of its bestseller, Jetta compact sedan. Moreover, of the total planned investment of $3.3 billion, the company will pump in around $1.2 billion in the United States.

Volkswagen AG Price and Consensus

Last year, the company launched SUVs namely, the Tiguan and Atlas. Almost at the same time, Volkswagen pledged to double its market share to 5% in the United States by 2020.

Also recently, the company has announced record-high sales of its core auto division, having risen 4.2% to 6.23 million units in 2017. The sales were primarily driven by higher demand for the company’s major brand models in the American as well as the Chinese markets. Among other regions, Volkswagen sales increased 5.2% to 339,700 units in the United States.

Price Performance

Shares of Volkswagen have rallied 25.6% in the last three months, outperforming the 14.4% rise of the industry it belongs to.

Zacks Rank & Other Key Picks

Volkswagen has a Zacks Rank #2 (Buy). A few other top-ranked stocks in the auto space are Wabco Holdings Inc. (NYSE:WBC) , Lear Corporation (NYSE:LEA) and Oshkosh Corporation (NYSE:OSK) , all carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wabco has an expected long-term growth rate of 15%. Over a month, shares of the company have climbed 9.1%.

Lear has an expected long-term growth rate of 7.1%. In the last three months, shares of the company have gained 9.3%.

Oshkosh has an expected long-term growth rate of 16.5%. Shares of the company have surged 34.9% in the last six months.

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