Volkswagen’s top labour representative has urged the carmaker’s management board to assign a new vehicle model to Germany to boost flagging capacity utilisation or risk missing hard-fought productivity goals.

The carmaker’s powerful unions are concerned that a 3.8 per cent drop in first-half group vehicle output in Germany, fuelled by waning demand for the Golf and Passat models, could inspire further cuts in Volkswagen’s high-cost home market.

Europe’s largest automaker last November agreed with unions to cut thousands of jobs through natural attrition, weed out red tape and cut R&D costs under a so-called future pact to revive the core namesake brand.

To counter any weakening at Wolfsburg, VW’s core plant employing over 60,000 people and grappling with low demand for the ageing Golf, management should overhaul assembly lines to be able to build an extra 40,000 Tiguan sport-utility vehicles, VW’s most sought-after model at present, works council chief Bernd Osterloh said.

Only by means of a high capacity utilisation we can achieve the productivity targets

“A high capacity utilisation of German plants is crucial for the success of the company and the jointly agreed future pact,” Osterloh said . “Only by means of a high capacity utilisation we can achieve the productivity targets.”

The carmaker plans to raise productivity at its German factories by 7.5 per cent this year and next, and a further five per cent in 2019 and 2020, counting on fixed-cost cuts and fine-tuning of R&D, procurement and production operations.

Investors have said a turnaround at the long-struggling VW brand is key to reviving the group’s fortunes following a costly diesel emissions test-cheating scandal.

Osterloh said the carmaker has earmarked another €500 million in cost savings on top of the 1.5 billion of efficiency gains already budgeted this year, without providing details.