• VW Group and workers agreed to 35,000 job cuts in Germany by 2030
• The job cuts will be via retirements and voluntary measures
• Further cost savings will come from efficiency drives at plants and R&D teams

Volkswagen Group and officials representing its workers reached an agreement on Dec. 20 to shed as many as 35,000 jobs in Germany by 2030, via retirements and voluntary measures.

The move, which averted further strike action, ensures there will be no compulsory layoffs until 2030, as well as no plant closures in Germany. VW Group has over 120,000 workers in Germany, and an official representing them previously warned that the automaker had threatened to close plants in the country for the first time in its history, and that there were three potential sites on the list.

However, the famous Transparent Factory in Dresden, Germany, where the Volkswagen ID.3 is built, will cease production in 2025. VW Group said it is working on alternative options, including the possibility of working with a third party. A plant in Belgium currently run by VW Group’s Audi brand for production of the Q8 E-Tron electric SUV is still expected to close in February.

VW Group said the reduction in labor costs would result in savings of around 1.5 billion euros ($1.56 billion) annually, and together with other structural changes and reductions in technical development costsVW , the savings will total more than 4 billion euros ($4.17 billion) annually in the medium term. One of the structural changes is a reduction in capacity across the German plants by 734,000 units annually.

Specific measures include moving production of the Volkswagen ID.3 and its related Cupra Born sibling to VW Group’s main plant in Wolfsburg, Germany, where the Golf is currently built. Production of the Golf will be moved to Puebla in Mexico starting from 2027. This means production at the Wolfsburg plant will be streamlined to two assembly lines instead of the current four.

Later this decade, the Wolfsburg plant will also receive production of the electric Mk9 Golf and another model, both based on the next-generation SSP dedicated EV platform.

For the reductions in development costs, VW Group said it will further integrate its brand-specific technical teams. In the future, for example, the technical team for the VW brand will be responsible for technical development across all VW Group mainstream brands.

VW Group said the move is a response to declining sales in Europe as well as strong competition, particularly from China. VW Group, together with fellow German brands, has also lost market share in its main market of China due to a lack of locally suited EV models, where previously it dominated.