Volkswagen reaches labor deal to keep German plants open

German automaker Volkswagen said it has reached an agreement with its union, ending a three-month standoff over proposed major cost-cutting measures, including plant closures. The company and union made the announcement on Friday. The union said the deal includes avoiding plant closures in the country, as well as safeguarding employment until 2030. But some wages and holiday allowances will be reduced for a certain period of time.

Volkswagen said it will relocate the production of its Golf models from the northern city of Wolfsburg to Mexico from 2027. Its plant in the eastern city of Dresden will stop vehicle production at the end of 2025, but the company says it will explore alternative options for its use.

The automaker also announced an agreement on a socially responsible reduction of its workforce by more than 35,000 at German Volkswagen sites by 2030. Any plant closure inside Germany would have been the first since Volkswagen's establishment in 1937.