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Emissions scandal: VW plans R15bn cut in investments

2015-10-14 08:17

RECALL ON THE CARDS: Crisis-hit automaker Volkswagen is planning to refit diesel powered models fingered in its emissions scandal according to its new chief executive Matthias Mueller. Image: AFP / Michal Cizek

Berlin - German automaker Volkswagen plans to slash investment in its core VW brand by 1 billion euros (1.1 billion dollars) per year amid mounting costs for its emissions scandal.

The group said it will also revamp its diesel-engine strategy after it was forced to admit last month that it installed software aimed at avoiding emissions tests in about 11 million of its diesel-powered vehicles around the world.

VW brand chief Herbert Diess said: "The Volkswagen brand is repositioning itself for the future."

Half its total revenue

Tuesday's announcement forms part of VW's efforts to minimize the fallout from the emissions scandal, which some analysts believe could cost the company about 100 billion euros - about half its total revenue for last year.

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VW said the automaker's new diesel strategy includes the development of a standardised electric architecture for passenger cars and light commercial vehicles. The next generation of Volkswagen's top-of-the-range Phaeton will also be re-envisioned as an electric vehicle.

Diesel vehicles will only be equipped with exhaust emissions systems that use the best environmental technology, the group added.

Police last week raided the VW group's head offices and private apartments across Germany as prosecutors around the world stepped up their investigations into the emissions scandal.

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Europe's biggest automaker has also been undergoing a major shakeout in its top management to help restore global confidence in the company following the affair, which at one point wiped about one third off the value of the group.

The VW group's new chief executive Matthias Mueller warned last week the company faced painful cutbacks to cover the rising costs of the scandal, saying it was reviewing all planned investments.

The series of changes announced on Tuesday hit the company's shares again with the stock falling 2.63% in late morning trading on the Frankfurt Stock Market.

Read more on:    vw  |  volkswagen  |  diesel  |  emissions scandal

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