Europe's leading carmaker Volkswagen announced on Monday it would lay off thousands of employees in Germany.

In a short statement, the company said it would extend an existing early-retirement program to more workers and offer termination packages to some others to persuade them to leave.

"Despite rising sales, the Volkswagen Group still has considerable over-capacity," the statement said, adding: "These measures apply to employees in all areas, including senior managers."

The early retirement packages could affect employees in all sections including senior managers born in 1951 and possibly those born in 1952.

Volkswagen also said the cuts could come largely at its plant in Wolfsburg, even though it had been chosen as the production site for a new compact sports utility vehicle.

"This would be an important decision for the site. However, it would not alter the fact that Volkswagen has surplus manpower of the order of several thousand employees at its German sites, in particular Wolfsburg," the statement said.

Bernd Pischetsrieder, the company's chief executive, has planned to cut worldwide costs by 3.1 billion euros (3.8 billion US dollars) in 2005.

The German news agency DPA quoted an expert as saying that Volkswagen could significantly improve its position by shutting the Brussels site and reduce labor costs at its plants in the west of Germany.

Ferdinand Dudenhoeffer, the expert, calculated that the group's main Volkswagen brand had an excess of production capacity equivalent to one million vehicles per year.

Source: Xinhua