VW finds billions in savings to deal with Dieselgate

Volkswagen has found another $2 billion in savings as the automaker battles the ongoing Dieselgate scandal.

Volkswagen, reeling from the ongoing Dieselgate scandal, has looked over its operations again and has come up with another $2 billion in potential savings. Last week, the automaker announced that it was putting off about $1.2 billion in investment. Yesterday, VW announced that it was rationalizing its menu of vehicles, offering fewer variants, while also pulling savings from other sources.

Automotive News yesterday quoted Bernard Osterloh, labor representative on the powerful supervisory board, who noted that not only would there be fewer variants but also that there would be a cut in the number of trim options. And, executives will be participating in the painful process of savings by taking smaller bonuses.

“We from the works council have long flagged the huge range of model variants and different components,” said Osterloh, a supervisory board member and one of the most powerful figures at VW Group, the trade paper continued. “That brings enormous complexity and adds to costs, for example, for logistics. We can take out costs there on a large scale and don’t have to talk about job cuts.”

The automaker also says it will find a total of 5 billion more euros (about $6 billion) through increased productivity. Volkswagen officials intend to speed up ways to save Europe’s largest automaker the billions it needs to pay for the growing Dieselgate scandal. The automaker expects that this portion of the emissions cheating scandal that has cost more than 8.7 billion euros or more than $9 billion.

Customers have begun balking at VW products; Osterloh told a press conference yesterday, because of the uncertainty brought on by the Dieselgate scandal. In order to keep the wheels turning and workers on the assembly lines, VW has planned to gently scale back in production to avoid a bloating buildup of unsold cars.

The automaker is besieged now on three fronts:

  1. Dieselgate, the scandal: VW has admitted doctoring the emissions testing software on as many as 11 million vehicles bearing the automakers marque or those of its subsidiaries, Audi, Porsche, Seat, Skoda and Lamborghini. The automaker is facing a number criminal probes, consumer lawsuits and regulatory actions. It has been told to come up with fixes for the problem post haste, if not sooner. Dieselgate applies primarily to its smaller diesel engines, variants of the EA189 that was released in 2008 and used until 2015 when the EA288 replaced it. The engines are the 1.2-, 1.6- and 2.0-liter versions in three versions.
  2. 800,000 vehicles are reported to have CO2 emissions problems in Europe
  3. 85,000 3.0-liter diesel V-6 engines, developed by Audi and used in VW, Audi and Porsche luxury models, are also said to have the emissions scamware installed.

In other VW news, the automaker:

· Has been fined by another nation. South Korea slapped a record fine of $14 million on VW for its emissions cheating. It has also halted the sale of more than 125,000 vehicles in the country.

  • Has suspended two more employees – engineers – in the scandal, bring the total number of employees to eight, six of whom are senior executives.
  • Has told the head of its Audi unit to continue pushing ahead with an internal probe of the unit.
  • Has seen its sales slow due to consumer doubts.
  • Has watched as the rest of Europe has rejected new diesel emissions standards, calling them too lax, and has watched as tougher controls have been sought.