Volkswagen has dramatically improved its productivity and capacity utilisation according to personnel director, Horst Neumann, speaking at a works meeting in Wolfsburg yesterday.

According to Automobilwoche, he said the company had made significant progress and was supported by works council chief, Bernd Osterloh, who said that progress in productivity is necessary to keep pace with international competition and reduce Toyota's grip on the world - and particularly the European market.

Volkswagen's restructuring is on-going. The workforce will be reduced by 20,000 by 2012 and working hours have been increased for no extra pay.

Nevertheless, new CEO Martin Winterkorn is embarked on a growth strategy aimed at challenging market leader Toyota.

Neumann said that Wolfsburg would produce 27 cars per employee in 2007, up from 24 in 2006, due mainly becuase the number of hours it takes to produce a car have fallen.

He added that future productivity improvements will come from bringing development, procurement and production closer together, and from increased capacity utilisation.

Neumann did not give any specific figures on plant utilisation, but Automobilwoche sources estimated Volkswagen plants worldwide operate at an average of 90% utilisation. On this basis Wolfsburg is operation near its capacity limits, it was at just 50-60% last year.

Osterloh called for a strategy of sustainable workforce guarantees from Volkswagen. One area of concern is the plan to assemble the Tiguan in Russia. To date the Auto 5000 company operating at Wolfsburg has been designated sole production plant for this model.

Auto 5000 works council chief Andreas Heim said Auto 5000 would have to be operating at full capacity before any Tiguan production could be added in Russia. It also builds the Touran.