BERLIN: Volkswagen will cut investment plans at its biggest division by 1 billion euros (US$1.1 billion) a year and step up development of electric vehicles, it said yesterday, as it battles to cope with the fallout from its cheating of diesel emissions tests.
The German company also said it would speed up cost cutting at the VW division, its largest by revenue, and put only the latest and “best environmental technology” in diesel vehicles.
Europe’s largest carmaker is battling the biggest business crisis in its 78-year history after admitting last month it installed software in diesel vehicles to deceive US regulators about the true level of their toxic emissions.
The scandal has wiped about a quarter off its market value, forced out its long-time chief executive and rocked both the global car industry and the German economy.
Germany’s ZEW think tank yesterday said its economic sentiment index had plummeted to its lowest level in a year, in part because of the uncertainty surrounding the auto industry, which employs more than 750,000 people in the country and is a major source of export income.
Economy Minister Sigmar Gabriel said he did not think VW’s problems would do lasting damage to Europe’s largest economy, however.
VW sources said on Friday that its namesake division would probably slump to a loss this year because it was set to shoulder the bulk of costs related to the scandal.
Some analysts have said the group could ultimately face a bill of 35 billion euros.
VW will cut spending on models, technology and factories at the VW brand by 1 billion euros a year through 2019 from its previous plans, a spokesman said.
