Volkswagen to cut spending by $1.4B as more vehicles come under scrutiny

The U.S. Environmental Protection Agency and the California Air Resources Board are investigating additionalsix-cylinder Volkswagen diesel engines for software that cheats onemissions tests, as the German automaker announces it will cut spending to pay for the fixes required.

It is already known that the software is on Volkswagen, Audi and Porsche vehicles with three-litre engines dating from 2014-16.

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As it prepared to meet a Friday deadline from regulators for a plan to fix 500,000 diesel engines in the U.S., Volkswagen said the samesoftware is on vehicles going back to the 2009 model year.

But it denied the software is designed to cheat on emissions testing. The EPA said it is still investigating.

The revelation could mean an additional85,000 Volkswagen, Audi and Porschevehicles in North Americaare affected.

The software is on Audi Q7 and Volkswagen Touareg SUVs from the 2009 through 2016 model years, as well as the Porsche Cayenne from 2013 to 2016. Also covered are Audi A6, A7, A8, and Q5s from the 2014 to 2016 model years, according to the EPA.

Also Friday, Volkswagen announced plans to cut its capital spending by 1 billion($1.4 billion Cdn) next year.

CEO Michael Mueller said the German automaker will cancel or postpone investments that aren't "absolutely necessary" to help cover the costs of recalling and repairing millions of vehicles that emit too much pollution because of illegal software that turns off emission controls.

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"We're driving cautiously over the coming months, but we know where we want to go and we want to ensure that the Volkswagen company comes out of the current situation strengthened," he said in a short statement issued after a board meeting at company headquarters.

He said capital spending for next year would be 12 billion ($17 billion Cdn), with plans for a new design centre and an all-electric Phaeton sedan put on hold.

The automaker has set aside 6.7 billion ($9.5 billion) to cover the cost of a recall of 11 million diesel vehicles worldwide,but the scandal has since widened to include some gas-powered vehicles. The company also faces legal costs and lawsuits.

No details on Canadian plans

An additional 100,000 diesel vehicles are affected in Canada. No details of the fix have yet been released.

The diesel models emit more nitrogen oxide, a gas that causes smog and can lead to respiratory effects, than is allowed by law.

The fix will likely involve a bigger exhaust system to filter out nitrogen oxide and there are fears that could lower the gas mileage of the vehicles, which has been one of their selling points.

The alternative is a chemical treatment process that cuts pollution, which may be difficult to install.

In either case, it will have to meet the scrutiny of U.S. regulators, who have stepped up their monitoring of emission controls since the scandal, testing models of every diesel vehicle on the road.

Volkswagen shares were up two per cent in trading on Friday after a German magazine reported there may be an easy fix to the diesel cars with a piece of hardware that is simply installed.