Volkswagen To Slash Options And Variants In €1.9 Billion Cost-Cut

Following the Volkswagen Group’s embarrassing and expensive diesel emissions defeat device scandal, the company's head-office in Germany has embarked on a huge cost-cutting exercise to help it stem its losses.

The company has already identified up to €1.9 billion (AU$2.7 billion) in potential savings by paring back the number of  variants and options available on its mainstream Volkswagen branded vehicles.

By reducing production line complexity, the company will bring down its overheads. Volkswagen senior executives are also believed to have agreed to receiving lower bonuses this year as another cost saving measure.

A top labour representative from within the company explained the changes in an interview with Bloomberg, saying that staff members on the factory floor have long flagged the large number of variants and components as adding cost and complexity.

By stripping back the number of production line alternatives, the cost of logistics drops, and a more efficient vehicle assembly becomes possible. A simpler line-up, free from 'non-essential' variants and options will be gradually rolled out.

Overall Volkswagen is looking at almost €5 billion (AU$7.3 billion) in cost reductions through increased efficiency, a move made to offset the expected €8.7 billion (AU$12.6 billion) loss brought about by Volkswagen's emissions scandal.

Volkswagen is also tipped to reduce investment by €1 billion (AU$1.4 billion) for 2016.

Other steps being taken by the company include winding back production to help prevent a glut of unsold vehicles from building up.

MORE: Volkswagen Emissions Scandal News