At a supervisory board meeting, German carmaker Volkswagen has announced a cutback in 2016 investments. The move came as the company was bracing for heavy fines for deliberately thwarting emissions tests.
The supervisory board of Europe's biggest auto maker said Friday it would cut 1 billion euros ($1.1 billion) from its investment plan for next year, citing uncertainties over just how much the company would have to spend on litigation and compensation plus repair money in the wake of its emissions cheating scandal.
Volkswagen explained it would cap spending on property, new plant construction and equipment in 2016.
"We'll strictly prioritize all planned investments; anything that's not absolutely necessary will be canceled or postponed," Chief Executive Matthias Müller said in a statement.
"We are operating in uncertain and volatile times and are responding to this," he added.
No big deal?
VW is stuck in the biggest business crisis in its 78-year history after admitting it had cheated US diesel emissions tests and provided wrong fuel consumption figures for some vehicles.
Analysts said the scandal could cost the carmaker 40 billion euros in fines, lawsuits and retrofits for affected vehicles.
But the announced drop in investment looks almost negligible in the face of the additional costs the company is bracing for.
Management announced that a planned new design center in VW's home town of Wolfsburg was being put on hold, with the construction of a paint shop in Mexico still under review.
Matthias Müller made it clear, though, that even more money than originally planned would be pumped into the development of alternative technologies such as electric and hybrid vehicles amid fears the scandal could hit diesel car sales long-term.
hg/cjc (Reuters, dpa)