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The newly-installed boss of Volkswagen, Matthias Mueller, has said the company can shine again in two to three years.

In a speech to managers he said the company needed to become leaner and take decisions more rapidly.

The comments come as VW said it would recall 8.5 million cars in Europe as a result of the diesel emissions scandal.

The move was prompted by Germany's automotive watchdog, which had earlier told VW to recall 2.4 million domestic cars.

German media reports suggest the KBA had rejected VW's proposals that car owners could voluntarily bring their cars in for repair.

VW gave no details of the recall and said it would contact individual customers directly.

It added that it was working on solutions to fix the recalled cars "at full speed".

Recovery plan

Mr Mueller took over as chief executive last month when the previous head, Mr Winterkorn, stepped down as a result of the scandal.

He told managers on Thursday: "We will significantly streamline structures, processes and (decision-making) bodies. We must become leaner and take decisions more rapidly."

"Our competitors are only waiting for us to fall behind on technology matters because we are so preoccupied with ourselves. But we won't let that happen," he added.

Italian raid

Meanwhile, Italian police have raided VW offices in Verona and Lamborghini offices in Bologna.

Reports suggest Italian prosecutors are investigating alleged commercial fraud.

Last month, authorities in the US discovered some VW diesel cars had been fitted with a device to cheat emissions tests. The carmaker subsequently admitted that up to 11 million cars worldwide could have the device fitted.

The company has launched a thorough investigation into the scandal, but new chairman Hans Dieter Poetsch has warned that answers would take "some time".

VW has set aside €6.5bn ($7.4bn; £4.8bn) to cover the costs of the scandal, but some experts believe the final bill could be much higher.

Shares in the company recovered slightly last week but are still down almost 20% since the scandal broke in the middle of September.

Media playback is unsupported on your device Media caption How do you test a car's emissions?

Separately, the man tipped to become VW's North America boss has resigned.

The company said Winfried Vahland was leaving because of "differing views on the organisation of the new group region".