Volkswagen Cuts Investment After Emissions Scandal


In an effort to secure finances needed to deal with the scandal involving the rigging of emissions in some of their vehicles, Volkswagen will reduce its spending by $1.07 billion for 2016 and prioritize all its investments to that aim.

Rigged Software

The scandal involved almost 500,000 Volkswagen four cylinder diesel cars that cheated on the required emission tests for the U.S. due to specially installed software. The scam was admitted by the company back in September. The same software is installed on close to 11 million vehicles globally, but for now, the cheating has been only confirmed on tests performed in the United States.

The car-manufacturing giant, that presented U.S. Environmental Protection Agency and the California Air Resources Board on Friday with its plan on how to fix the affected vehicles, has secured $7.4 billion to cover the cost of recalling cars that are installed with the rigged software. However, many experts agree that the total expense of the scandal, which will include all the fines and losses in sales, will most likely be several times that.

Shoring-Up Its Finances

To secure the required funding and offset some of the costs, the company has made a decision to only make investments deemed absolutely necessary, thereby reducing its overall expenditure for 2016 to €12 billion.

Among the investment cuts is Wolfsburg’s new design center as well as an all-electric sedan, the Phaeton, with other projects under review. However, Volkswagen officials have commented that they do not plan to make any cuts that will endanger the company’s long term future.

That future does seem rather shaky at the moment though, as the scandal has spread since the September admissions, with the carmaker also admitting that it has discovered carbon dioxide emission irregularities in 800,000 of its other vehicles worldwide, including some from its gasoline powered vehicles.


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