Volkswagen is cutting back production and laying off an estimated 500 employees as sales of the Passat sedan haven’t met expectations of VW leaders.

The new assembly plant, which opened in 2011, has been operating two 10-hour shifts six days a week. VW officials plan to throttle back production to two 10-hour shifts working only four days a week with only two shift teams verses the three teams they currently employ.

“The pipeline is over-full from the facility to the dealers,” says Frank Fischer, head of VW Chattanooga operations.

According to the Automotive News Data Center, the automaker had an average days’ supply of 97 vehicles on dealer lots on April 1; well above the industry average of just 60 days.

VW plans to have the lay offs completed by June 30 and will leave the Chattanooga plant with roughly 2,700 workers, down from around 3,200.

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