Martin Winterkorn, Volkswagen Group’s new CEO, has said that he intends to fill ‘lucrative market niches’ with all-new models as he tries to reduce excess capacity and boost profit.

‘The Volkswagen brand is far from tapping its full potential,’ Winterkorn told employees in a letter. It his first public statement on plans for Volkswagen since taking over as CEO of the VW Group on January 1st.

Winterkorn said in November he aims to beat a target of increasing the group’s pretax profit nearly fivefold to EUR5.1bn in 2008 from EUR1.1bn in 2004.

According to a Bloomberg report, Volkswagen has said Volkswagen-brand plants operate at just 80% of capacity, compared with 97% at BMW and 93% capacity utilisation at Toyota Motor Corp.

Volkswagen Supervisory Board Chairman Ferdinand Piech named Winterkorn last November to replace Bernd Pischetsrieder as CEO. Winterkorn then decided to reorganise the company and run the Volkswagen brand himself, pushing out Wolfgang Bernhard – who was said to be aligned to Pischetsrieder.

Piech was the driving force behind a strategy to send the VW brand upmarket, typified by the ill-fated Volkswagen Phaeton model – a strategy that was dropped when Pischetsrieder took over as CEO. Piech is said to be pushing for bigger engines in upcoming VW brand models (such as Scirocco coupe and Tiguan SUV) in order to underpin luxury aspirations.