FRANKFURT -- Wolfgang Bernhard, the star manager hired to galvanize Volkswagen AG's flagship brands, aims to bring down costs and boost quality but knows savings alone won't do the job, he told an in-house newspaper.

"You cannot save your way to prosperity. At the end of the day it all depends on having the right products," he said in a wide-ranging interview in the March issue of VW's Autogramm.

"The thing is," he added, "if you offer the greatest product but are not competitive because your costs are too high and people can't or don't want to afford it, then we will be saddled with it."

After making his mark by helping to turn around Chrysler before he was let go last year by DaimlerChrysler, Bernhard is about to head the VW brand group that includes the VW, Bentley, Skoda and Bugatti marques.

He said he was attracted to Europe's biggest carmaker by the VW brand, which he called "as strong as a bear". His first job will be to visit plants around the world to get to know the people and markets in his territory.

Viewed from the outside, VW is a strong competitor, he said.

"I would say we have an earnings problem that does not lead back to the wrong products but rather is primarily a cost problem. We also have to work on the quality of our vehicles", although all European manufacturers have to do this, he said.

In North America, where VW loses money, it already has a good product lineup, he said.

"The Jetta has a good reputation in the United States and the Touareg is doing well. The worm will turn with the new Passat and the new Jetta. But we have to catch up in the United States as well on the quality side and on costs," he said.

"The dollar's exchange rate is giving us strong headaches in America, and there are a few quirks that we have to keep in mind when we deliver cars to America."

These include simple things such as improving AM radio reception or getting cup holders in the right place.

Bernhard was shoved out the door of DaimlerChrysler last year for his take-no-prisoners managerial style just days before he was to take over the premium Mercedes Car Group.

Investors hope Bernhard will boost productivity and eliminate costs at the struggling carmaker while shaking up the cosy atmosphere at the company.