Volkswagen AG: Measures to cut back manpower will be increased

WOLFSBURG, Germany--Sept. 5, 2005--Despite rising sales, the Volkswagen Group (FWB:VOW) (LSE:VKW) (SWX:VOW) still has considerable overcapacity and will therefore be intensifying its efforts to cut back manpower. This will be announced today by the Chairman of the Board of Management of Volkswagen AG, Dr. Bernd Pischetsrieder, during a shop floor meeting at the main plant in Wolfsburg. These cutbacks will be achieved using instruments available under the collective agreement such as early retirement under a partial retirement program. It is planned to extend eligibility for early retirement to employees born in 1951, with a further extension to cover employees born in 1952 if required. Furthermore, individual employees will be offered termination packages. These measures apply to employees in all areas, including senior managers.

The speech at the works meeting also states that a decision to build the compact SUV in Wolfsburg could secure some 1,000 jobs. This would be an important decision for the site. However, it would not alter the fact that Volkswagen has surplus manpower of the order of several thousand employees at its German sites, in particular Wolfsburg.

As already announced, Volkswagen expects a year-on-year improvement in both operating profit after special items and profit before tax in 2005.

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