The new Volkswagen Golf will cost more than EUR1,000 less to produce than the current model.

According to a report in the Frankfurter Allgemeine Zeitung (FAZ) Volkswagen has reduced costs by around EUR1,165 per car. "With the current model we started to make money after two years - with the current model we make money straight away," said an unnamed source from within the company.

The sixth generation Golf goes on sale at the end of this year. It will use some of the same components as the current Golf, which went on sale in 2003.

The FAZ reported that the savings are mainly due to the abolition of the four day week and better materials purchasing, as well as higher planned production volumes.

Volkswagen will make an operating profit of 5% on the new model, significantly more than it makes on the current model, said FAZ.