New Volkswagen CEO tells staff of difficulties ahead

Volkswagen has told staff to brace for massive cuts following the company’s emission scandal, with all “non-essential investment” halted.

The German company, which became the top-selling automaker by units in the year’s first half, has lots over a third of its market capitalisation since the news came out last month.

CEO Matthias Mueller addressed 20,000 workers at the VW’s Wolfsburg headquarters, telling them that all investment would be reviewed to try and prevent job losses. However, the impact was not yet known.

The car maker has quarantined 6.5 billion euro in the third quarter to deal with the scandal, which emerged on September 18. This would not cover it, Mueller conceded.

"It includes the estimated cost to fix the affected vehicles," AAP reports him as saying.

"But it won't be enough. We must prepare for significant penalties. And many could take the events as an opportunity to claim damages against Volkswagen."

In the US alone, it could face fines of $US 18 billion.

Reuters reports that Volkswagen’s supervisory board is under enormous pressure to find out who is responsible for installing the “defeat device” software, which cheats lab tests for emissions in Type EA 189 diesel engines.

Ten senior managers have been suspended.

Investigations could take months, according to the company.

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