Volkswagen AG Chief Executive Officer Matthias Mueller recently announced the company embroiled in a major emission scandal would delay or even cancel the non-essential investments.
The company announced last month it had cheated on diesel emissions tests in the US and that no less than almost 11 million cars were actually fitted with the illegal software and sold around the world, prompting the biggest crisis in the company’s 78-year history. That has arguably left them with the need to safeguard cash for repairs, possible fines and the prospect of numerous lawsuits from consumers and investors. “We will review all planned investments, and what isn’t absolutely vital will be canceled or delayed,” commented Mueller in front of some 20,000 employees at the German company’s headquarters Tuesday, according to a statement. “And that’s why we will re-adjust our efficiency program. I will be completely clear: this won’t be painless.” Repairing up to 11 million autos is going to be a costly project.
VW has already set aside some 6.5 billion euros ($7.29 billion) for costs related to the diesel emissions scandal but Mueller added the sum is not enough to also handle fines and potential legal damages. According to experts at Sanford C. Bernstein Ltd., the regulatory penalty in the US alone could be as high as $7.4 billion. According to sources, labor officials want VW to reel in research and development expenses, the executives also want personnel spending to be reduced and other variants include dropping the purchasing costs and cutting sponsorship activities.