VW to Halt All Non-Vital Investments

Volkswagen Group CEO Matthias Mueller says the company will cancel or delay all investments that aren't "absolutely vital" as it prepares for the cost of fixing 11 million diesel-powered vehicles rigged to cheat emission laws.

The company has set aside €6.5 billion to remedy the problem. But in the U.S. alone the company faces a government fine that could be as great at €6.6 billion, plus dozens of lawsuits compensation to vehicle owners. Several other countries also have threatened punitive action.

Those legal and regulatory costs don't include the price of repairing the cheater vehicles themselves. Says Mueller, "This won't be painless."

Analysts predict the company will suspend capacity expansion, including a $1 billion project in Mexico announced last spring. Job cuts also appear likely.

Observers suggest VW slash its €15.5 billion annual R&D budget the industry's largest by a wide margin and streamline what one describes as an "incredibly inefficient" operating structure. One analysis puts the company's purchasing and personnel costs at or near all-time highs.

VW continues to weigh options about how to bring the affected vehicles into regulatory compliance. Remedies could range from a simple software update at roughly €40 to replacing the entire vehicle for €10,000 or more. The company has been ordered to present a plan tomorrow explaining how it will repair some 2.8 million cheater diesels it sold in Germany