UPDATE: VW Sets New 10% Savings Target

Volkswagen AG CEO Matthias Mueller has told executives that the group’s 2017 budget will include 10% cuts in material and overhead costs to help offset the impact of its global diesel emission cheat scandal.

Trade newspaper Automobilwoche says Mueller describes the cuts as “heavy” and adds that the effects of the diesel crisis over the next several years “will go to the limits of what we can bear.” VW’s supervisor board is expected to meet on Nov. 18 to set new multi-year spending levels for products, plants and equipment.

Separately, Handelsblatt reports that VW aims to hike the productivity of its factories by 5%-8% per year. The newspaper says achieving that goal would enable the company to eliminate third-shift and weekend operations.

VW has expanded its budget to about €18 billion ($20 billion) to cover the cost of fixing some 11 million diesel-powered cars it rigged to evade emission standards. But the company so far has agreed to pay as much as $15.3 billion in the U.S. alone for repairs, buy-back options, owner compensation and reparations.

Automobilwoche says Mueller notes that the massive spending on the diesel scandal comes as the company should be investing heavily to streamline its operations, develop new-energy powertrains and pursue such technologies as connected and self-driving vehicle systems.