VW to suspend production at showcase Dresden plant

The Volkswagen Group, one of the largest car manufacturers in the world, will suspend production at its small showcase factory in Dresden, Germany, next year as it changes its model strategy to cut costs in the wake of the emissions test scandal, agencies reported.

VW had said in October that it would discontinue production of the premium Phaeton saloon, which is built at the glass-walled plant in the eastern state of Saxony.

The model -- a pet project of former chairman Ferdinand Piech, which cost more than 1 billion euros ($1.1 billion) to develop -- has never met sales targets since coming to market in 2002.

Production of the Phaeton, assembled by 300 of the Dresden plant's 500 workers, will end in late March. The site, the smallest of VW's 10 German factories, will then be reconfigured for about a year to prepare for producing an all-electric Phaeton by 2019.

VW has pledged to expand its offerings of hybrid and all-electric cars as its rigging of US diesel emissions tests was seen by analysts as casting a shadow over the entire diesel vehicle industry.

VW said on Wednesday that, as planned, it would start modifying millions of diesel cars at the end of January to ensure that they met emissions regulations. The plan involves recalling 8.5 million cars across the European Union, including 2.4 million in Germany.