(Yicai) June 4 -- Volkswagen intends to cut the German auto giant’s costs in China by 20 percent over the next three years compared with last year, according to an internal document seen by Yicai.

Savings will be made in areas such as fixed and labor costs, the document that was shared with all staff in China on May 30 said. It was jointly sent by Volkswagen Group China's Chairman and Chief Executive Ralf Brandstätter, and Executive Vice President of Volkswagen Group China Martin Hofmann.

Efficiency will be the key factor in the next two years, it said, as Volkswagen is advancing its transformation in the global and Chinese markets through investments in new technologies to ensure future competitiveness.

To enable these investments, profitability is paramount, the document noted, adding that the group’s Chinese business team started making efforts to implement the new performance plan last year.

Volkswagen has long been the leading player in China’s auto market, the world’s largest, and it remains No. 1 in terms of sales volume. But like other top foreign carmakers, the Wolfsburg-based company has come under intense pressure from the development of new energy vehicles and popular domestic NEV brands. 

Volkswagen delivered 3.2 million vehicles in China last year, while Chinese NEV maker BYD notched up global sales in excess of 3 million.

Last month, Chinese NEV startup Xpeng Motors and Volkswagen announced that they will jointly develop a new electric vehicle platform that is expected to reduce production costs and shorten development times with the aim of regaining market share from domestic rivals such as BYD.

Media reports last month also pointed to staff cuts at FAW-Volkswagen Automotive, a joint venture of the German carmaker and China’s FAW Group.

Editors: Tang Shihua, Tom Litting