The aggressive cost-reduction target comes as VW faces mounting pressure from weak demand in China, its largest market, and escalating trade tensions with the United States (US).

Reuters says the cost-cutting initiative aims to ensure that returns go back to sustainable levels, according to Manager Magazin.

Chief Executive Officer (CEO) Oliver Blume and finance chief Arno Antlitz presented a "massive" savings plan at a closed-door meeting with the company's top executives in Berlin in mid-January, the magazine says.

Where exactly the savings are to be made remained unclear at the meeting, the magazine said, but plant closures could also be on the table.

VW's expenditures on software and the dual development of combustion engines and electric drives remain high, Manager Magazin said, citing a source present at the meeting.

Asked to comment on the report, a VW spokesperson says the automaker has already achieved savings in the double-digit billion-euro range. The program has enabled the group to offset geopolitical headwinds such as US tariffs, according to the spokesperson.

The VW representative says Oliver will provide an interim update at the company's annual results press conference on March 10.

Possible plans for more cost cuts come after VW and labour representatives agreed a deal in December 2024 for sweeping changes to the automaker's German operations, including more than 35 000 future job cuts and capacity reductions.

The agreement was a far cry from the drastic savings that the company had originally proposed, which included closing three German factories to make the VW brand more competitive.

VW's top labour representative, Daniela Cavallo, acknowledged the Manager Magazin report but said measures for competitiveness and for a socially acceptable impact on the workforce had been agreed upon in the December 2024 deal.

"With this agreement, we have expressly ruled out plant closures and layoffs for operational reasons," Daniela says in a statement.

Adding to speculation about fresh cost cuts, business paper Handelsblatt reported on February 13 that VW's cost-cutting program did not meet expectations last year because the automaker failed to meet internal cost targets at its German car factories.

The three largest plants in Germany, Wolfsburg, Emden and Zwickau, fell short of the agreed targets in terms of capacity utilisation and efficiency, the paper reported.

Costs also remain too high at VW's commercial vehicle plant in Hanover, Handelsblatt adds in its reporting.