FRANKFURT -- Volkswagen said on Thursday it still needed to reduce costs significantly and did not expect economic recovery in western markets in the short term.
"An economic recovery in western Europe, the USA and South America cannot be expected in the short term," Chief Executive Bernd Pischetsrieder said in a speech to the company's employee meeting.
VW has said it expects weaker overall demand for cars on both sides of the Atlantic this year, but growth in China, the firm's second-biggest market, would nudge global auto demand higher.
Pischetsrieder said in light of the difficult economic situation, "significant" cost savings were still necessary.
"All spending must be examined," VW said in a statement. "Every employee can and must play a part in securing the future."
Europe's biggest carmaker faces continued high development costs as it brings a raft of updated models to the market -- the company boasts that on average it will launch an updated model variant somewhere in the world every three weeks this year.
The firm's profits tumbled by over two thirds in the first quarter, but it stuck to a pledge to improve operating profit substantially in the course of the year as its new Touran, Touareg and forthcoming Golf V models boost unit sales, although the result would still be below last year's 4.76 billion euros ($5.59 billion).