Mexican Media Brands
VW Expected to Suspend 5-Year Investment Budget
Volkswagen AG’s supervisory board plans on Friday to suspend the company’s rolling five-year investment budget as it girds for the impact of massive recalls to fix more than 11 million vehicles that don’t meet emission standards.
#economics
Share
Volkswagen AG’s supervisory board plans on Friday to suspend the company’s rolling five-year investment budget as it girds for the impact of massive recalls to fix more than 11 million vehicles that don’t meet emission standards.
Sources tell Bloomberg News the 20-member board may agree to shorten the investment plan to three years or less to give the company more financial flexibility.
VW faces what some analysts say could be €25 billion in regulatory fines, lawsuits and repairs related to excessive emissions from diesel and gasoline vehicles. This week VW launched meetings with multiple banks to arrange for as much as €20 billion in short-term loans to preserve its liquidity.
The group’s investment budget, previously set at more than €17 billion ($18 billion) per year, covers more than 300 models made by its 12 brands. Arndt Ellinghort, an analyst with Evercore ISI, tell Bloomberg that VW’s cost base has “gone terribly wrong” over the past five years. He figures the group’s budget has ballooned by two-thirds since 2010 and could safely be cut 10%.
VW brand operations already has vowed to reduce its annual spending by €1 billion.
RELATED CONTENT
-
On The German Auto Industry
A look at several things that are going on in the German auto industry—from new vehicles to stamping to building electric vehicles.
-
On Lincoln-Shinola, Euro EV Sales, Engineered Carbon, and more
On a Lincoln-Shinola concept, Euro EV sales, engineered carbon for fuel cells, a thermal sensor for ADAS, battery analytics, and measuring vehicle performance in use with big data
-
On Global EV Sales, Lean and the Supply Chain & Dealing With Snow
The distribution of EVs and potential implications, why lean still matters even with supply chain issues, where there are the most industrial robots, a potential coming shortage that isn’t a microprocessor, mapping tech and obscured signs, and a look at the future