VW cuts costs to deal with emissions scandal

Volkswagen announced Friday that it will cut around billion in spending in 2016 as it copes with the still-ballooning costs of its emissions cheating scandal.

The disclosure widened the scandal, which had previously focused mainly on smaller-engined, mass-market cars, and raised the possibility that engineers at both the Audi and VW brands could have been involved in separate emissions schemes.

Mueller said Friday after a meeting of the board at company headquarters in Wolfsburg, Germany, that the cuts would bring capital expenditure down to 12 billion euros next year.

Volkswagen continues to reel from revelations in September that its diesel cars were equipped with software “defeat devices” created to cheat in emissions tests.

“We are operating in uncertain and volatile times and are responding to this”, he added.

But Volkswagen subsequently revealed that beyond the nitrogen oxide scam, it had also understated carbon dioxide emissions of 800,000 vehicles, including petrol cars. The statement says the agencies will investigate and take appropriate action.Volkswagen has denied that software was installed on the larger diesels “to change the emissions values in any impermissible way” and vowed to cooperate with the EPA.Volkswagen’s emissions troubles are far from over.

Volkswagen officials in Chattanooga said the cuts won’t effect the Passat factory or the 2,500-plus workers there.

The automaker has set aside more than $7 billion to cover the alterations, but the AP reports the total cost could be several times higher – and Volkswagen is also facing the possibility of billions of dollars in fines. “We will strictly prioritize all planned investments… anything that is not absolutely necessary will be cancelled or postponed”.

Earlier on Friday, the European Commission gave VW until the end of the year to provide information on its overstatement of fuel efficiency in some vehicles. The figure is around €1bn less than the budget for the previous year.

At 1248 GMT, VW shares were up 1.1% at €107.05.

The company expects to save money by delaying some 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. Labor representatives hold 10 of the 20 seats on the supervisory board.