Volkswagen to cut 2016 capex by $1.1 bn to fix emission flaws
21 November 2015
German car maker Volkswagen on Friday announced plans to cut €1 billion ($1.1 billion) from its investment plan for next year amidst mounting pressure in the US and Europe to fix vehicles that do not comply with emission standards.
Volkswagen, which braces for a multi-billion-euro hit from its emissions cheating scandal, is set to provide detailed plans to fix vehicles that do not comply with US emissions standards.
Volkswagen is facing more pressure from officials in Washington and California to buy back older diesel cars.
A California Air Resources Board spokesman said officials at the automaker are scheduled to meet Friday with CARB and the US Environmental Protection Agency to present detailed proposals for recalling and fixing about 482,000 vehicles sold in the US with diesel engines that emit smog-forming pollutants than the law permits.
California has set a 20 November deadline for Volkswagen to come up with a plan to fix the diesel cars affected by its rigging of emissions tests.
The car maker said in September that around 11 million diesel powered cars were affected worldwide, including 482,000 in the United States.
The Volkswagen Group on Friday said it is aligning investment activity in its automotive division with the current situation.
''The aim is for planned investments in property, plant and equipment, investment property and int1next year. The average figure for the previous planning period was about €13 billion per year.
"We are operating in uncertain and volatile times and are responding to this", Matthias Müller, chairman of the board of management of Volkswagen Aktiengesellschaft, said in Wolfsburg on Friday, after a regular meeting of the company's supervisory board. "We will strictly prioritise all planned investments and expenditures. As announced, anything that is not absolutely necessary will be cancelled or postponed."
Muller also announced intention to increase expenditure on alternative drive technologies by approximately €100 million next year. "We are not going to make the mistake of economising on our future. For this reason we are planning to further increase spending on the development of e-mobility and digitalisation", he said.
The core focus will be on rapidly developing electric drive systems for the Volkswagen Passenger Cars, Audi and Porsche brands, he added.
Most of the capex is earmarked for new products and the completion of ongoing investments to expand capacity. Approximately 50 per cent of the capex will be spent on the group's 28 locations in Germany.
The joint ventures in China are not consolidated and are therefore not included in the capex reduction plan.
These companies will maintain their previously announced investment levels and are planning expenditures in the amount of approximately €4.4 billion in 2016. These investments will be financed from the joint ventures' own funds.