The UK’s Financial Times has reported that VW's chief executive Martin Winterkorn has ordered senior managers at the core passenger car brand to find €5bn in annual savings by 2017.

As reported by the publication, Mr Winterkorn said: ‘This is urgent because today the profitability of our brand is still too low. That is why we must now take action that is clear, effective and sometimes painful.’

The brand will look to decrease fixed costs, reduce complexity, find savings in procurement and lower development costs, which have gone up 80% since 2010.

The carmaker is struggling with declining sales in Brazil, Russia and India sales and has also been hit by the impact of the strong euro and the costs of investing in low-emission technology.

Mr Winterkorn added that ‘we are dealing with home made problems as well’.

‘This is not about cosmetic change. This is about asking fundamental questions,’ he said.

‘If we do not tackle these issues now, we will not achieve our margin target of at least 6 per cent for the Volkswagen brand.’