Volkswagen May Cut R&D Budget to Fend Off "Existence-Threatening Crisis"
Volkswagen has a very steep, very tough hill to climb, and Volkswagen’s incoming chairman said the emissions scandal that affects 11 million cars is “a threat to the firm’s viability albeit a surmountable one,” reports Reuters.
Dieter Pötsch, who will soon take the chairman spot at Volkswagen Group AG, described the challenges ahead as an “existence-threatening crisis for the company” during a corporate meeting with employees in Wolfsburg, Germany’s Welt am Sonntag reported.
In order to take on those challenges, Volkswagen needs to fund the repairs of some 11 million vehicles, meaning cuts may be made to the company’s 100 billion euro R&D investment budget that was expected to last until 2018.
A cut in R&D spending is seen as a way to avoid a downgrade of the company’s credit ratings, a source close to the company’s board told Reuters.
Since the diesel emissions saga erupted in mid-September, Volkswagen has seen top-level executives shuffled around the company and — in certain cases — removing executives from posts entirely.
Martin Winterkorn, Volkswagen AG’s former CEO, left his post last week — replaced by Porsche CEO Mattias Müller — amid the scandal. Winterkorn was briefly under investigation in Germany until prosecutors said they had no proof Winterkorn knew of the cheating emissions software.
In the United States, at least one of Volkswagen’s largest dealers is taking the brand’s cars off the front line of its lot, the brand is the only one to see transaction prices trend negative last month, and its daily sales rate is down significantly even though the brand saw an overall monthly sales uptick due to a favorable sales situation in September.
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Reducing R&D is a given. The questions to ask are what programs are going to be cut and/or delayed, and how large the cuts will be. If those reductions can't produce enough savings, then start looking for stock dilution, asset sales, layoffs, etc. to supplement those cuts.
@highdesertcat...just because there is oil, does not mean we are to continue using it. The whole point to EV or alternative fuel, is to reduce emissions. Correct?