Wednesday 28 September 2016

VW's Audi unit scales back spending plans for next year

Maria Sheahan, Joern Polz and David Stamp

Published 29/12/2015 | 02:30

Audi said it’s delaying the construction of new wind tunnel. Photographer: Krisztian Bocsi/Bloomberg
Audi said it’s delaying the construction of new wind tunnel. Photographer: Krisztian Bocsi/Bloomberg

Volkswagen's (VW) flagship Audi division reined in its spending plans for 2016 and delayed the construction of a new wind tunnel yesterday, after the German carmaking group was hit by a scandal over rigged emissions tests.

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Audi, which made a higher operating profit than the VW group in the first nine months of 2015, said it would invest more than €3bn in plants and equipment in 2016.

A company source said the plan foresaw spending of €3.3bn for next year. Under its previous budget drawn up a year ago, Audi announced investments of €17bn over 2015-19, or an annual average of €3.4bn.

"With the current investment programme, we obviously want to enhance the brand's strong position, but at the same time, we aim to achieve additional financial scope by means of further process and cost optimisation," Audi finance chief Axel Strotbek said in a statement.

The move comes after VW, Europe's biggest automotive group, cut €1bn from its 2016 investment plan in November, as its emissions cheating scandal expanded to include tens of thousands more US vehicles.

Audi vowed not to save at the expense of future growth but rather to examine every investment decision individually.

"The board of management has therefore decided to postpone the construction of a new wind tunnel for one year," it said. The company did not comment on investment plans beyond 2016.

Earlier this month new VW chief executive Matthias Mueller named his new management team, including the replacement for the group's research and development chief who left as a result of the emissions scandal. Under the overhaul the number of top managers reporting to the chief executive almost halves.

"These structural changes speed up the decision-making process, reduce complexity and increase efficiency," Mr Mueller, the head of Porsche before being asked to take over as group chief executive, said.

The new appointments are mostly internal, although Ulrich Eichhorn returns to become R&D chief after three years at the German automobile industry association.

Volkswagen has made clear it wants to free up Mr Mueller to concentrate on overall strategy, which involves drawing up new business targets for the group up to 2025, and manage the move towards electric vehicles. (Reuters)

Irish Independent

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