"In the past, we wasted too much time being preoccupied with each other," Schaefer said. "The competition is outside, it's not within the company."
Volume models make up about 80 percent of VW’s global deliveries, making them the "the core of the company," according to Schaefer. VW is aiming for an efficiency gain of 20 percent, he said.
Schaefer became head of VW brand on July 1 when he also took overall charge of VW Group's volume brands.
As part of the push, production of the VW Passat midsize sedan in Germany and its platform sister model, the Skoda Superb, in Czech Republic will shift to Slovakia to help reduce internal overlaps.
VW Group must become more competitive in the face of rivals ranging from Tesla to incumbent manufacturers like Stellantis, Schaefer said.
The group's mass-market brands sharing more factories and improving cooperation on production and development will help deliver on the efficiency goal, he said.
While Volkswagen group generates bumper profit and operating cash flow, the luxury Audi and Porsche nameplates have long padded the carmaker's results. Attempts to lift returns at the main VW brand by streamlining processes have so far yielded modest results.
VW is set to add more popular crossover and SUV models to its mass-market lineup to stay competitive, Schaefer said.
The segment -- which also covers VW brand's new electric model range code-named Trinity -- "offers the biggest growth potential for the brand," he said.