VW plans 1-billion-euro cut in investments, new diesel strategy

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Berlin (dpa) – German carmaker Volkswagen plans to slash investment in its core VW brand by 1 billion euros (1.1 billion dollars) per year amid mounting costs for an 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.

“The Volkswagen brand is repositioning itself for the future,” said VW brand chief Herbert Diess said Tuesday following a special meeting of the VW board.

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.

“We are becoming more efficient, we are giving our product range and our core technologies a new focus, and we are creating room for forward-looking technologies by speeding up the efficiency program,” Diess said.

VW said the carmaker’s new diesel strategy includes the development of a standardized 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.

Europe’s biggest carmaker 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 per cent in late morning trading on the Frankfurt Stock Market.

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