Volkswagen reportedly is sharply reining in spending as a consequence of the huge costs incurred by the ongoing diesel emissions test-cheat crisis that has engulfed the automaker.

According to Reuters the German publication Automobilwoche at the weekend said chief executive Matthias Mueller had demanded material costs and overheads be cut by 10% in the 2017 budget.

Volkswagen declined to comment to the news agency on the report.

Mueller was quoted as saying: "They [cost cuts] will be heavy and it won't be done without pain. The effects of this crisis in the coming years will go to the limits of what we can bear."

This was happening when ideally the company should be spending money on dealing with structural change in the automotive industry, he added.

Volkswagen is spending billions of euros on recall repairs, regulatory fines, an independent law firm investigation, legal fees and other costs associated with the scandal that broke a year ago.

Renters noted this has prompted ongoing talks between management and employees on a cost-cutting deal for the core VW brand.

A now-departed senior VW executive told just-auto some time ago an early decision was taken to let the VW brand take the hit on the diesel emissions issue and the brand's new model launch activity this last year has been minimal in favour of other group volume brands Seat and Skoda.

VW's supervisory board is expected to meet on 18 November to approve new spending targets on products, plant and equipment for the coming years, company sources have told Reuters.