Volkswagen Pares Back Budget In Wake Of Dieselgate

2014 Volkswagen Touareg TDI badge (Credit: Volkswagen )

The Dieselgate storm continues to rage for Volkswagen. The German automaker is playing things conservatively as it rides things out, and that means trimming back its budget in a number of ways. You can say goodbye to a number of sports and community event sponsorships, and every new model from VW and its brands is being evaluated with intense scrutiny.

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Perhaps one of the most painful cutbacks involves research and development. VW says it’s paring back R&D spending by about 1 billion euro. It’s no secret that cars are becoming more technologically advanced, thanks in no small part to ever-tightening government fuel economy and emissions requirements. It’s also fitting that the company’s attempts to cheat the system could mean it falls even further behind on staying ahead of these regulations. This development could also hurt the development of more onboard technologies aimed at increasing safety and entertainment options, two areas of big concern for car shoppers.

Adding to the injury VW is already nursing, German newspaper Bild am Sonntag recently ran a report claiming that ex-CEO Martin Winterkorn knew all about the emissions software cheats in 2014, along with a number of other executives in the company. This flies in the face of claims that a few “rogue” engineers were the sole source of the deception, which only works to increase suspicion that Volkswagen still isn’t being entirely honest.

The Detroit News revealed that a Senator Ed Markey (D – MA) sent a letter to NHTSA, requesting that the group forfeits fuel economy credits awarded to Volkswagen for its TDI models. The automaker has drawn quite a bit of ire for actively fighting in the past for diesel vehicles to get fuel-economy credits, going so far as to not send representatives for the announcement of the 2025 CAFE standards, the only major automaker to do that.

Finally, Volkswagen’s TDI models are even being recalled in India, of all places, a country that’s not generally known for tough emissions standards. The Indian government is forcing the recall of 300,000 VWs that have software cheats installed, with more to come from Skoda and Audi. This news only further damages the automaker’s short-term reputation, while any long-term effects remain to be seen.