Volkswagen slashes €1bn in spending after emissions scandal

Volkswagen will reduce investment spending at its main passenger-car brand by €1 billion ($1.1 billion) a year and speed up other cost cuts in the wake of a diesel emissions-cheating scandal.

The German carmaker will switch to a different technology for treating diesel emissions in Europe and North America "as soon as possible," the Germany-based carmaker said in a statement on Tuesday.

VW plans to put more focus on developing plug-in hybrids and other electric-powered vehicles, including redesigning the Phaeton sedan as an all-electric model.

The cuts come amid renewed criticism for Volkswagen’s handling of the scandal, which affects some 11 million cars worldwide.

The company was far too slow to disclose its use of software to enable its diesel cars to pass US laboratory emissions tests despite far higher on-road pollution, said Stephan Weil, prime minister of the German state of Lower Saxony and a Volkswagen board member.

“This admission should clearly have come much sooner - a further serious mistake,” Mr Weil told the Lower Saxony parliament on Tuesday.

“Who decided this course of action and when is also something that’s being investigated.”

A Volkswagen supervisory board committee charged with overseeing the external investigation into the emissions cheating meets on Tuesday in Wolfsburg.

The carmaker presented German authorities with a plan last week for fixing affected cars in its home market.

Regulators are still reviewing the proposals, which range from a software update to new parts for diesel motors.

The company has so far set aside €6.5 billion for repairs and to compensate customers and has said that amount won’t be enough.

Meanwhile, German investor confidence fell to the lowest level in a year as Europe’s largest economy faces the fallout from the Volkswagen scandal and weaker growth in emerging markets.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months ahead, slid to 1.9 in October from 12.1 in September.

- Bloomberg