Darren Cassey profile picture Darren Cassey 7 years ago

5 Fall Outs From The Volkswagen Dieselgate Saga

VW has announced that it is slashing budgets across the business to cover the estimated €30bn (£21bn, $32bn) costs associated with the Dieselgate scandal, but what does that mean for the company? Here are some of the losers now VW is pulling out cash

Remind me later

1. Next-gen Golf will re-use many parts

Volkswagen - 5 Fall Outs From The Volkswagen Dieselgate Saga - Blog

According to a report by Reuters, Volkswagen is looking at re-using as many parts as possible for its next generation Golf. Doing this could easily help the company save millions of Euros, however is does come with a small risk of losing ground on its rivals. Volkswagen is in the fortunate position of already having a class leading car, so it can arguably afford to slow its progress into the next generation.

On the down side, customers may be less willing to part with cash to upgrade to a new model if it’s largely identical to the one they already have. It’s a tight rope that VW will have to walk very carefully.

2. No managerial promotions in 2016

Volkswagen - 5 Fall Outs From The Volkswagen Dieselgate Saga - Blog

Bad news for bigwigs at the German manufacturer. As part of its attempts to cut costs, Volkswagen is freezing promotions of staff in managerial positions. This does seem like something of a token gesture, though. VW is a large company, so while the relatively small wage increases this nullifies will soon add up, it likely won’t make much of a dent in the €30bn Euro cost of the scandal.

In fact, a works council chief called the decision “merely symbolic”, saying the move would only affect employees. He also expressed concern that, in a “cost cuts at any price” company culture, manager bonuses could be unfairly impacted.

3. Football team sponsorship could be cancelled

Volkswagen - 5 Fall Outs From The Volkswagen Dieselgate Saga - Blog

It is reported that Volkswagen spends about €1.5m (£1m, $1.6m) on football team sponsorship every year, but that looks set to be axed under its new investment budget. With anything that’s ‘not essential’ at risk of getting chopped, it’s easy to see why sponsorship deals may be cut.

That’s exactly what’s set to happen, according to German newspaper Bild am Sonntag. Currently, Volkswagen sponsors Bundesliga sides Hannover 96, Werder Bremen and Schalke 04, and Second Division side 1860 Munich.

4. New Volkswagen design centre in Wolfsburg put on hold

Volkswagen - 5 Fall Outs From The Volkswagen Dieselgate Saga - Blog

In a move that will save a massive €100m, VW has revealed that it will be putting the building of its new design centre in Wolfsburg on hold. The centre was intended to be a flagship design studio for the company, but it is now deemed an unnecessary extravagance.

5. Electric Phaeton successor delayed

Volkswagen - 5 Fall Outs From The Volkswagen Dieselgate Saga - Blog

Recently we heard that Volkswagen was planning to bring a successor to the cult hero Phaeton, in the form of an electric vehicle. It would’ve been a bold but understandable move; bringing silent EV power to the luxury market seems like a no-brainer.

Unfortunately a new electrified model of an already niche product just isn’t likely to reap the kind of profits VW requires, so the Phaeton EV project has been put on ice.

Sources: PRWeek, Reuters and Car Magazine