Volkswagen May Cut R&D Budget to Fend Off "Existence-Threatening Crisis"

by Mark Stevenson

Updated: November 6th, 2015 Published: October 3rd, 2015

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.

#Chairman #Cuts #Existence-threateningCrisis #R7d #ResearchAndDevelopment #Volkswagen #VwDieselScandal

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Pch101 on Oct 04, 2015

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.

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Kmars2009 on Oct 04, 2015

@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?

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- Highdesertcat on Oct 04, 2015
  
  kmars2009, I'm sure that there is a small eco-friendly tree-hugging segment of the American population that wants to reduce emissions. I say good on them! I'm not one of them. But I am a proponent of the more choice we have, the merrier. This means if people wants EVs, let there be EVs (without taxpayer subsidies). However, since there is sooooooooooooooo much oil, why not use it? It has served us long and well. Ditto coal! If we don't burn it, someone else will because we will export it. And I also think that there is room for alternative sources of energy, like solar, wind, wave, geothermal, natgas and nuclear. The more the merrier, but without taxpayer subsidies.
  
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- Mcs on Oct 04, 2015
  
  @highdesertcat >> This means if people wants EVs, let there be EVs (without taxpayer subsidies). That's okay, but we should get rid of ICE car and oil industry subsidies as well. http://www.reliableplant.com/Read/14907/foreign-owned-auto-plants-netted-$36b-in-subsidies
  
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- Highdesertcat on Oct 04, 2015
  
  mcs, I agree! It is because of those subsidies that gasoline prices were artificially driven higher than they should have been. But the harsh reality of an overabundance of oil has finally set in and gas prices today are where they should have been all along.
  
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- Mcs on Oct 04, 2015
  
  @highdesertcat Actually, I think the subsidies for Tesla and the Leaf are due to expire. Not sure of the time period. I think the technology is improving to the point they really won't need the subsidies soon - and I really don't think Tesla needs them now. I'm also in a somewhat unique position of receiving both oil subsidies and an EV subsidy. I'd be fine without them - although, I do look at it as a way of reducing the taxes I pay. I'm a New Mexico taxpayer and I've never even been in the state. Tax cuts for the rich sort of in disguise.
  
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