As Volkswagen Falters, Audi Cuts Spending

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Audi, one of the luxury divisions of Volkswagen, along with Porsche, will cut spending, most likely as a means to help VW keep its cash war chest in light of legal costs from its diesel engine scandal.

The first part of the company’s announcement masked the plan:

Audi will lay the foundations for future growth in 2016. In the coming financial year, the company plans to continue with its high levels of investment. Along with further process and cost optimization, the planned capital expenditure is to amount to more than € 3 billion, and will support the Ingolstadt-based company along its successful path. Half of the planned investment will take place at the German sites in Ingolstadt and Neckarsulm. Furthermore, Audi will recruit additional experts in the field of future technologies once again in 2016.

However, further along in the press release:

While Audi is consciously investing in new models and technologies, as well as in the expansion of its worldwide production network, CFO Axel Strotbek also sees potential for continual cost improvements: “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.” According to Strotbek, the company will not save at the expense of its future, but every investment will be carefully examined. The Board of Management has therefore decided to postpone the construction of a new wind tunnel for one year.

An obtuse way of describing cost-cutting decisions.

The VW problem, which also includes some Audi engines, continues to creep throughout Volkswagen.