WOLFSBURG, Germany (AP) – Volkswagen will cut its spending by 1 billion euros ($1.07 billion) next year and “strictly prioritize” investments as it shores up its finances to deal with its emissions-rigging scandal, CEO Michael Mueller said Friday after a board meeting. On Friday he announced plans to reduce the company’s annual capital expenditures from $13.9 billion to$12.8 billion.
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As it grapples with an ongoing emissions cheating scandal, Volkswagen is “driving cautiously” – financially speaking.
Volkswagen’s scandal has widened since the September revelations.
Audi and Volkswagen are following Porsche in halting sales of models equipped with the 3.0-liter diesel V6 engine that the U.S. Environmental Protection Agency (EPA) now says is equipped with “defeat device” software, a new report says.
Friday’s investment plan was only for 2016, rather than the five years Volkswagen has provided in the past.
The company is working on a more comprehensive spending overhaul as part of a new strategy Chief Executive Officer Matthias Mueller intends to unveil next year, said one of the people, who asked not to be named because the talks are private.
German automaker Volkswagen, tainted by an emissions scandal, said it will present United States authorities tomorrow with plans for bringing its vehicles outfitted with pollution-cheating software into compliance with regulations.
CARB and EPA plan another meeting with senior VW officials to discuss the issue in the first week of December. But on Friday, it only gave numbers for next year, and did not give a figure for research and development, which last year accounted for about a quarter of overall planned spending of 85.6 billion euros for 2015-19. What’s not immediately necessary will be canceled or postponed, the CEO said.
VW’s preference shares, down about a third since the crisis broke, were up 1.5 percent to 107.40 euros at 1355 GMT.
The company expects to save money by delaying a few projects, such as the planned transformation of its prestigious, but loss-making, Phaeton luxury sedan into a pure battery-powered electric vehicle to compete with Tesla Motors Inc. In addition, about 800,000 vehicles also had irregular readings for carbon dioxide.
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“In our view the short planning horizon and the relatively small 7% cut also reflect the material resistance of VW’s works council to cut investment and costs”, he said. Labor representatives hold 10 of the 20 seats on the supervisory board.
