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 Volkswagen has told U.S. regulators that emissions issues in
larger luxury cars and SUVs extend to an additional 75,000 vehicles
dating back to 2009, the U.S. Environmental Protection Agency said
on Friday.
The disclosure widened the scandal, which had previously focused
mainly on smaller-engined, mass-market cars, and raised the
possibility that engineers at both the Audi and VW brands could have
been involved in separate emissions schemes.
Earlier on Friday, the supervisory board of VW, Europe's biggest
auto manufacturer, said it would cap spending on property, plant and
equipment at around 12 billion euros ($12.8 billion) next year, down
about 8 percent on its previous plan of around 13 billion euros.
Volkswagen (VW) <VOWG_p.DE> is battling the biggest business crisis
in its 78-year history after admitting in September that it cheated
diesel emissions tests in 482,000 2.0-liter diesel cars sold in the
United States since 2009.
 In November, the EPA and the California Air Resources Board also
accused VW of evading emissions in at least 10,000 Audi, Porsche and
VW sport utility vehicles and cars with 3.0-liter V-6 diesel
engines. VW initially denied the findings.
But during a meeting on Thursday, VW and Audi officials told the EPA
that all 3.0-liter diesel engines from model years 2009 through 2016
had higher emissions than allowed.
Audi spokeswoman Jeri Ward acknowledged that the 3.0-liter software
at issue "meets (EPA and CARB's) definition of a defeat device."
The new disclosure covers a total of 85,000 vehicles, the EPA said,
including the diesel Audi 2016 Audi A6 Quattro, A7 Quattro, A8, A8L,
Q5, Porsche Cayenne and Volkswagen Touraeg.
Analysts have said the scandals could cost the company 40 billion
euros or more in fines, lawsuits and vehicle refits.
The widening scandal "slows VW’s ability to move beyond the negative
headlines and start the rebuilding process," said Karl Brauer,
senior analyst at Kelley Blue Book.
"You can’t recover from a scandal while it's still growing. You have
to reach a point where everything is on the table and no more bad
news is coming — then you can start repairing the damage.”
The EPA and CARB held a two-hour meeting on Friday with VW to
discuss the company's plans for the 482,000 2.0-liter cars that the
automaker has admitted have illegal software that allow them to
evade emissions standards.
The EPA said in a statement the automaker had provided an "initial
proposal" for fixing the 2.0-liter diesel vehicles and that it would
be taken under review.
 VW said in a statement late Friday it would "fully cooperate with
EPA and CARB as we work to develop an approved remedy as quickly as
possible" for the 2.0-liter diesels. The automaker added that it is
"committed to making things right and regaining the trust of our
valued customers."
CARB and EPA plan another meeting with senior VW officials to
discuss the issue in the first week of December.
Chief Executive Matthias Mueller said in a statement: "We are
operating in uncertain and volatile times and are responding to
this. We will strictly prioritize all planned investments ...
anything that is not absolutely necessary will be cancelled or
postponed."
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The cut in capital spending is VW's first since the height of the
financial crisis in 2009.
In previous years, the company has published investment plans for
several years ahead. But on Friday, it only gave numbers for next
year, and did not give a figure for research and development, which
last year accounted for about a quarter of overall planned spending
of 85.6 billion euros for 2015-19.
CUTBACKS
Some analysts have long urged VW to reduce spending and become more
efficient, with profit margins at its mass-market namesake brand
lagging those at rivals.
They have suggested the emissions scandal could provide an
opportunity for management to force through changes that otherwise
might have been resisted by the company's influential trade unions,
and ultimately boost VW shares.
VW's preference shares, down about a third since the crisis broke,
were up 1.5 percent to 107.40 euros at 1355 GMT.
Amid fears the emissions scandal could hit sales of diesel vehicles,
Mueller said VW would increase spending on alternative technologies
such as electric and hybrid vehicles by 100 million euros next year
compared with previous targets.
He said construction of a planned new design center in VW's home
town of Wolfsburg was being put on hold, saving about 100 million
euros, while the construction of a paint shop in Mexico was under
review.
In the model range, the successor to the high-end Phaeton saloon, an
electric model, is being delayed.
Earlier on Friday, the European Commission gave VW until the end of
the year to provide information on its overstatement of fuel
efficiency in some vehicles.
VW also said Mueller would temporarily take on responsibility for
personnel matters until a replacement was found for Horst Neumann,
who retires at the end of November. It named two new employee
representatives to the supervisory board as well, to replace
departing ones.
($1 = 0.9362 euros)
(Editing by Soyoung Kim, Tom Brown and Leslie Adler)
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