German auto giant Volkswagen will cut investments by one billion euros in 2016, said its chief executive, as the group sought to scale back on spending to cope with its massive pollution cheating scandal.

"For 2016, we will reduce our investments to 12 billion euros ($13 billion). That's about a billion less than the average over the past few years," said Matthias Mueller at a press conference following a supervisory board meeting.

"We will examine all our investments and all our spending. Everything that is not necessary will be dropped or postponed," he said.

Nevertheless, Mueller said the company "will in no case make savings at the expense of our future", as he promised that the carmaker will allocate an extra 100 million euros in 2016 on the development of hybrid and electric engines.

Among projects to be postponed is a design centre at Wolfsburg, the group's headquarters in northern Germany. The introduction of the next generation VW Phaeton will also be pushed back.

VW is engulfed in a huge pollution scandal that was initially centred on so-called defeat devices -- sophisticated software fitted into diesel engines to skew the results of tests for nitrogen oxide emissions.

The carmaker has admitted to fitting 11 million diesel engines worldwide with the rogue software, triggering both regulatory and criminal investigations in several countries, including Germany and the United States.

But Volkswagen subsequently revealed that beyond the nitrogen oxide scam, it had also understated carbon dioxide emissions of 800,000 vehicles, including petrol cars.
Source: AFP