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Volkswagen to reduce headcount at 'no longer competitive' VW brand

FILE PHOTO: The New York International Auto Show, in Manhattan, New York City

BERLIN (Reuters) -Volkswagen's 10 billion euro ($10.9 billion) savings programme will include staff reductions, managers told staff on Monday as brand chief Thomas Schaefer warned that high costs and low productivity were making its cars uncompetitive.

The German carmaker is in the midst of negotiations with its works council over a cost-cutting scheme at its VW brand, the first step in a group-wide drive to boost efficiency in the transition to electric cars.

"With many of our pre-existing structures, processes and high costs, we are no longer competitive as the Volkswagen brand," Schaefer told a staff meeting at the carmaker's headquarters in Wolfsburg, according to a post on the company's intranet site and seen by Reuters.

The company had previously said it planned to take advantage of the "demographic curve" to reduce its workforce, having pledged that it would not carry out dismissals until 2029.

In Monday's meeting, human resources board member Gunnar Kilian said this would be achieved through agreements on partial or early retirement.

However, the bulk of the 10 billion euro savings goal would be achieved through measures other than personnel reduction, Kilian added, with the full details to be defined by the end of the year.

"We need to finally be brave and honest enough to throw things overboard that are being duplicated within the company or are simply ballast we don't need for good results," Kilian said.

($1 = 0.9168 euros)

(Reporting by Victoria WalderseeWriting by Matthias WilliamsEditing by Miranda Murray and David Goodman)

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