German automaker Volkswagen, tainted by an emissions scandal expected to cost it billions, said Thursday it had postponed a planned investment in China.
"In light of the current situation and the review of our investments, the company has decided to delay by two or three years the increase of its stake in its joint venture with FAW," a VW spokesman told AFP.
Volkswagen was one of the earliest foreign entrants to the China market and produces domestically through joint ventures with China's largest automaker SAIC, based in Shanghai, and number three China FAW Group in the northeastern province of Jilin.
China -- the world's biggest auto market -- is crucial for VW, which delivered 3.67 million cars in the country last year, exceeding US rival General Motors which sold 3.54 million, figures from the companies showed.
Volkswagen was confirming remarks made on Wednesday by the head of Volkswagen China, Jochem Heizmann, at the Canton car show in southern China.
VW currently has a 40-percent stake in the FAW joint venture and planned to lift it to 49.9 percent -- the same stake it has in the SAIC venture.
The cost of the investment "was still being evaluated", Volkswagen said, adding that China remained "a very important country" to the company as its biggest market.
"Volkswagen is reviewing all its investment plans -- those that are not considered essential will be cancelled or delayed," the spokesman said.
Volkswagen continues to reel from revelations in September that its diesel cars were equipped with software "defeat devices" designed to cheat in emissions tests.
It has estimated that some 11 million diesel vehicles worldwide have been fitted with the software.
The risk of tens of billions in fines, legal settlements and repair costs has wiped around 40 percent off the automaker's market capitalisation.