VW to cut costs in wake of scandal

A diesel Passat is seen at the Al Johnson Volkswagen Volvo dealership on Tuesday in Dalton, Ga.

FRANKFURT, Germany - Volkswagen is expected to announce substantial spending cuts on Friday as the carmaker braces for the financial impact of its emissions-cheating crisis - potentially setting up a confrontation with its powerful labor representatives.

Volkswagen also faces a Friday deadline to inform regulators in the United States of how it plans to bring its diesel cars there into compliance with air-quality standards. The company admitted in September that it had installed software in the cars that was meant to enable the vehicles to cheat on emissions tests.

That scandal, which now involves about 11 million vehicles worldwide - most of them in Europe - is a big reason Volkswagen is now forced to cut costs. The company must pay to modify the cars and could face billions of dollars in fines and legal settlements.

Senior officials from the U.S. Environmental Protection Agency and the California Air Resources Board plan to meet with representatives from Volkswagen and its Audi division on Thursday and Friday to review the company's proposed solutions, according to a spokeswoman for the EPA.