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 The German company also said it would speed up cost cutting at the
VW division, its largest by revenues, and put only the latest and
"best environmental technology" in diesel vehicles.
Europe's largest carmaker is battling the biggest business crisis in
its 78-year history after admitting last month it installed software
in diesel vehicles to deceive U.S. regulators about the true level
of their toxic emissions.
The scandal has wiped about a quarter off its market value, forced
out its long-time chief executive and rocked both the global car
industry and the German economy.
Germany's ZEW think tank said on Tuesday its economic sentiment
index had plummeted to its lowest level in a year, in part because
of the uncertainty surrounding the auto industry, which employs more
than 750,000 people in the country and is a major source of export
income.
Economy Minister Sigmar Gabriel said he did not think Volkswagen's
problems would do lasting damage to Europe's largest economy,
however.
Volkswagen <VOWG_p.DE> sources told Reuters on Friday that its
namesake division would probably slump to a loss this year because
it was set to shoulder the bulk of costs related to the scandal.
Some analysts have said the group could ultimately face a bill of as
much as 35 billion euros for refitting vehicles, regulatory fines,
lawsuits and other costs.
At 1120 GMT, Volkswagen shares were down 1.4 percent at 107.05
euros.
SAVING MONEY
Volkswagen will cut spending on models, technology and production
facilities at the VW brand by 1 billion euros a year through 2019
from its previous plans, a spokesman said.
He declined to say what those investment plans had been.
In November, Volkswagen announced 85.6 billion euros of investments
across the group between 2015 and 2019, with half earmarked for
modernizing and expanding the model range.
Other brands within the group, which includes Audi, Porsche, Seat
and Skoda, are working on similar efficiency-boosting programs, the
spokesman said, without giving details.
Volkswagen said last year it planned to increase cost savings at the
VW division, where profit margins lag much of the rest of the group
as well as major rival Toyota, to 5 billion euros a year by 2017.
On Tuesday, the division said it would speed up those cuts and stop
making the money-losing Phaeton luxury saloon, a pet project of
former chairman Ferdinand Piech that has never met its original
sales target of 20,000 cars a year.
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The next-generation Phaeton, due to hit showrooms by about
2019-2020, will only be offered as a fully-electric vehicle, it
said.
ELECTRIC CARS
Analysts have warned Volkswagen's problems could cast a shadow over
the entire diesel vehicle industry.
Although other carmakers do not appear to have used so-called defeat
device software to cheat emissions tests, the scandal has
highlighted differences between laboratory results and the on-road
emissions of cars and vans often marketed to buyers as cleaner
alternatives to using gasoline.
Tighter rules are being introduced that could hit the
competitiveness of diesel vehicles. That would be a particular blow
for manufacturers in Europe, where around a half of new car sales
are diesels versus a small fraction in the United States.
Volkswagen said on Tuesday it would step up development of electric
and plug-in hybrid cars.
The VW brand will work on a new toolkit that can be used to build
compact electric passenger cars and light commercial vehicles across
the group, it said.
"There is a real chance for VW to even extract something positive
from the diesel fiasco," said Stefan Bratzel, head of the Center of
Automotive Management near Cologne.
"Funnelling more resources into electric mobility gives them a
credible future perspective to try to overcome this crisis."
($1 = 0.8795 euros)
(Writing by Mark Potter; Editing by Maria Sheahan and Anna Willard)
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