Report – VW brand axing managerial promotions on dieselgate fallout image

According to a report coming from a German business magazine over the weekend, Volkswagen will ax any managerial promotion planned over the course of 2016 at its core brand to assist the cost cutting strategy.

The largest European automaker plans for the namesake division to shoulder more than 30 billion euros of costs stemming from the diesel emissions crisis, sparing its other divisions – including low cost Skoda or Seat but also heavy profit yielders Audi and Porsche. The Manager Magazin report, which cited internal – unnamed – sources from Volkswagen, also pits the German company planning to develop the next generation Golf with as many parts possible reused from the current generation to lower costs by hundreds of millions of euros. Volkswagen AG is experiencing its worst business crisis in its 78-year history after it admitted last month to rigging diesel emissions tests in the US and acknowledging that up to 11 million vehicles sold around the world have been fitted with the illegal software. The company has already provisioned 6.5 billion euros ($7.2 billion) during the third quarter to bear the brunt of the recall costs stemming from the scandal and the German magazine claims VW forecasts total costs of more than 30 billion euros.

On Wednesday, when the company is due to report financial results for the third quarter, the analysts expect VW Ag to post losses of 3.5 billion euros on the operating level after last year it had a profit of 3.2 billion. So far the automaker has only committed to driving down investment plans at the VW subsidiary – the largest by sales – and increase the drive to lower expenses in order to cope with the scandal’s financial fallout.

Via Reuters