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Volkswagen's Audi slows down spending plan 2016

Dec 29, 2015 08:36 AM EST

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Audi division, the flagship of Volkswagen, has slashed its spending plan for 2016. Audi has also decided to go slow on the construction of a new wind tunnel. The emissions scandal has been taking a toll on Volkswagen.

The German automobile major Volkswagen (VW Group) has decided to invest over euro 3 billion ($3.3 billion) for 2016. Audi will be investing in plants and equipment. 

Reuters reports that Audi was planning to invest euro17 billion for 2015-19 giving an annual average investment of euro 3.4 billion. Audi reported operating profit for the first nine months of 2015 higher than Volkswagen Group. 

"With the current investment program, 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 optimization", Axel Strotbek, Finance Chief at Audi, said in a statement: 

The German automobile group is working on recovery plan from the impact of emissions scandal, as reported by USA Today. The reducing of spending plan itself shows that Audi is slowing down on investment and becoming more careful on business strategy. 

Audi intends to continue with its growth strategy that includes entering a new market segment. Audi Q2 micro crossover model will be launched in 2016. Audi division is also pinning hopes on Audi A5 coupe for 2016 sales.

The emissions scandal has impacted Volkswagen in a more negative way. The emissions-rigging software installed in Volkswagen vehicles sold mostly in the US came into light in August 2014.

According to a report published by The Telegraph, Audi division is keen on protecting its future growth. The Board has decided to postpone the construction of a new wind tunnel by one year. 

However, Audi division didn't make any announcement on investments or future plans beyond 2016. 

Volkswagen is Europe's largest automotive company and has reduced its spending plan by euro1 billion for 2016 year. After the emissions scandal, Audi has decided to consider investment plans on its own. 

Volkswagen Group manufactures vehicles under the brand names of VW, Audi, and Porsche. The Audi sales rose 0.4 percent in November. The luxury brand vehicles have not been fixed with cheating software.

Hence, they're not impacted by the emissions scandal until November, when Volkswagen admitted that 85,000 bigger diesel vehicles Audi A6 and Q5 also violated the US emission norms. 

Sales of Volkswagen brand vehicles in the US declined by 25 percent to 23,882 during 11 months of 2015, when compared with the previous corresponding period.

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