VW investment cuts

German auto giant Volkswagen said Tuesday it would need to slash its annual investment budget for its main VW brand by 1 billion euros ($1.13 billion) as a result of its large-scale emission tests cheating and expected litigation and compensation costs.

"The newly constituted management board of the VW brand has taken a number of strategic decisions in an extraordinary meeting today," the company said in a statement.

Brand chief Herbert Diess was quoted as saying that apart from the planned cut in investments, efficiency measures would be stepped up to save money earlier than originally planned.

Volkswagen also announced it would overhaul its diesel-engine strategy, saying that a complete switch to the most advanced and cleanest exhaust gas system would be implemented for Europe and North America "within the shortest possible time."

Skeptical investors

The Wolfsburg-based firm said it would use a new standard modular design system for the development of electric cars and electric light commercial vehicles, adding that the new version of its luxury Phaeton would also be an electric vehicle.

Volkswagen's scandal surrounding its rigging of emission tests in many parts of the world had also had an impact on investor sentiment in Germany, the country's ZEW economic think tank said Tuesday.

It saw its monthly forward-looking index gauging investors' confidence in the economy take a hit as the barometer dropped by 10.2 points to just 1.9 points in October.

hg/cjc (dpa, Reuters, AFP)