WOLFSBURG, Germany Volkswagen (VOWG_p.DE) will cut spending on factories, equipment and technology over the next four years, it said on Friday, as it struggles to fund a strategic shift to electric cars while grappling with the cost of its emissions scandal. Volkswagen (VW) announced a long-awaited turnaround plan for its core brand on Friday which foresees 30,000 job cuts globally at the division and 3.7 billion euros ($3.9 billion) in annual cost savings from 2020.After a meeting of its supervisory board, VW said it would steadily reduce capital expenditure in the coming years to 6 percent of automotive sales by 2020 from 6.9 percent last year, and cut development costs to the same level."The VW group will refine its focus," Chief Executive Matthias Mueller said in an emailed statement. "We are investing more selectively and are setting clear priorities."
The statement was short on detail compared with VW's annual rolling budget updates before the emissions scandal, which included absolute spending targets for products, capacity and even its Chinese joint ventures.In its November 2014 update published before the scandal, VW announced 85.6 billion euros of spending in its automotive operations over a five-year period with the Chinese ventures adding another 22 billion euros.
A VW spokesman said the company was no longer fixated on providing "big numbers" and was instead prioritising quality over quantity."Transparency falls by the wayside in times of uncertainty and problems," said NordLB analyst Frank Schwope who has a "Hold" recommendation on VW shares. "That's a clear sign that things are not going well for a company."
(Reporting by Andreas Cremer; editing by David Clarke)
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Updated Date: Nov 19, 2016 06:15 AM