Volkswagen AG chief Martin Winterkorn has confirmed there’ll be a new compact model released under the VW label, whose extra production numbers should also prevent further job cuts. In an interview with German newspaper Sueddeutsche Zeitung, he proposed the "design and development of a new, very small, model below the Fox," adding that it’ll be "an economical, everyday small car that looks attractive and is affordable."

Unlike DaimlerChrysler’s recently launched second-generation Smart compact, the new VW model will be a genuine four-seater with storage space for the passenger’s luggage, reports the Detroit News. VW is currently in the process of shedding up to 20,000 jobs and introducing longer working hours at its German plant, a program launched by previous CEO Bernd Pischetsrieder, but Winterkorn has indicated the company did not plan any more cuts beyond that.

"We need the team in its current strength in order to realize additional projects that we are getting started now," he was quoted as saying, adding "there will definitely be a hybrid propulsion for cars in the compact class such as the Polo and Golf - as quickly as possible."