Audi 2015 Annual Report Download - page 188

REPORT ON EXPECTED DEVELOPMENTS, RISKS AND OPPORTUNITIES
REPORT ON EXPECTED DEVELOPMENTS
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In China, the world’s largest single market, we want to confirm
our market leadership in the premium automotive segment
again in the coming year and expect the volume of deliveries to
be slightly above the level of the previous year. The Audi Group
expects the arrival of various new and updated models in our
product portfolio for China to provide a positive impetus. How-
ever, the market environment there is likely to remain very
challenging in 2016.
The brand with the Four Rings is currently updating a large
number of models and extending its product portfolio with a
particular focus on SUV models. Following the successful
launches of new versions of the popular A4 family, the new
Audi Q7 and the Audi R8 in 2015, these models will gradually
be rolled out in other car markets worldwide. 2016 will also
see the market introduction of the new Audi Q2 car line, for
example. We expect to attract a large number of young cus-
tomers to the Audi brand with our new entry-level SUV. We will
also be gradually rolling out the Q7 e-tron quattro in the mar-
kets in 2016. Another new model to delight our customers
from 2016 will be the SQ7. Furthermore, new generations of
the popular models of the A5 family and the sporty, versatile
Audi Q5 are to be introduced in the near future. The new A4 car
line will be joined by the A4 allroad quattro, S4 Sedan and
S4 Avant in the course of this year. We also look forward to the
updated models of our successful Audi A3 line providing fresh
impetus in 2016. In China, the new long-wheelbase version of
the popular full-size model A6, the A6L, became available at
the start of 2016, with the A6L e-tron due to follow later in
the year.
We expect a moderate increase in deliveries to customers for
the Lamborghini brand in 2016. New models, such as the
Huracán LP 610-4 Coupé, which is available with extensive new
features from the 2016 model year, as well as the new rear-
wheel-drive Lamborghini Huracán LP 580-2 and the Lamborghini
Huracán LP 610-4 Spyder, both of which are making their
market appearance in spring 2016, should positively impact
deliveries to customers.
We anticipate a significant rise in deliveries to customers by
the motorcycle brand Ducati thanks to the large number of
new products such as the new Flat Track Pro premium lifestyle
model in the Scrambler model line and the new XDiavel.
// ANTICIPATED FINANCIAL PERFORMANCE
With the volume growth we are targeting, we should be able
to moderately increase revenue for the Audi Group in 2016,
subject to the economic environment and exchange rate move-
ments. For 2016, we currently anticipate that average exchange
rates for the euro against the U.S. dollar, the Chinese renminbi
and other significant currencies for the Audi Group will be at
similar levels to 2015. High fluctuations in exchange rates
could nevertheless occur in the course of the year.
Our 2016 target for the operating return on sales is a figure
within the strategic target corridor of 8 to 10 percent. As well
as the increase in volume, our ongoing improvements to pro-
cesses and costs should also have a positive impact on the
operating return on sales. High upfront spending on the future
of our Company – for example for pioneering technologies and
for updating and expanding our product range – will initially
weigh on profit. The same is true of the high number of product
launches and market introductions planned for the 2016 fiscal
year. The further expansion of our production network
strengthens our global presence in important sales regions,
but along with the expansion of our corporate structures it
will have a dampening effect on profit in 2016. We will, for
example, start up our new production plant in San José Chiapa
(Mexico). We plan to build 150,000 Audi Q5 models annually.
We will invest a total of more than EUR 1 billion in facilities
and infrastructure at the new location, and plan to employ
around 3,800 employees there by the time series production
starts.
We expect the return on investment (ROI) for the Audi Group
to be within the range of 16 to 18 percent in 2016. We conse-
quently clearly exceed our minimum required rate of return of
9 percent. The development in ROI will essentially reflect our
continuing high product and structural investments. These
result in a rise in invested assets and have a corresponding
impact on ROI.
// ANTICIPATED FINANCIAL POSITION
The Audi Group intends to finance its planned corporate growth
entirely from internally generated cash flow in 2016. We ex-
pect a net cash flow of between EUR 2.0 and 2.5 billion. The
principal factors affecting the net cash flow, over and above
the profit performance, are likely to remain high cash outflows
for investing activities to maintain our long-term model and
technology initiative, plus the expansion of the international
location structures.