Volkswagen CEO Mueller Warns Some Planned Investments Will Be ‘Canceled or Delayed’

Newly appointed Volkswagen CEO Matthias Mueller has warned employees the automaker will undergo spending cutbacks following the now widely publicized diesel emissions scandal, Automotive News reports.

Volkswagen must fix around 11 million cars to put them in compliance of emissions laws after it was discovered the automaker fitted certain models with a ‘defeat device’ to cheat emissions tests. It will be a costly endeavor, and the $7.29 billion it has already set aside to cover the expense won’t be enough to fix all the cars and pay legal fines that will almost certainly be laid on it.

“We will review all planned investments, and what isn’t absolutely vital will be canceled or delayed,” Mueller said Tuesday. “And that’s why we will re-adjust our efficiency program. I will be completely clear: this won’t be painless.”

It’s not yet clear where Volkswagen plans to implement cutbacks. One analyst told AN the automaker could put its aggressive push to gain market share in North America on hold in order to save money, and may also delay a planned $1 billion expansion at its Puebla, Mexico-based assembly plant. Volkswagen supervisory board member Bernd Osterloh said the automaker “will have to question everything that’s not economical.”

The budget cutbacks may force Volkswagen to take action in regards to its “incredibly inefficient,” practices, an industry analyst told AN, referencing its $17.4 billion research and development budget. Its R&D budget is higher than Ford’s and General Motors’ combined, and its purchasing costs are currently higher than ever.

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