A deal to cut 35,000 jobs and keep its plants in Germany running has been reached between Volkswagen AG and its workers’ unions.

The historic agreement, dubbed “Zukunft Volkswagen”, calls for the remaining jobs to be “locked out” and production capacity to be reduced at the automotive giant’s plants on German soil, and is interpreted as the most important step in ensuring the brand’s viability and long-term competitiveness.

Key points of the agreement between VAG and union representatives include a commitment to a “socially responsible reduction of the workforce by more than 35,000 employees at Volkswagen’s German plants by 2030, together with the introduction of a new job security plan.”

The agreement, according to the Group’s statement, “will enable sustainable cost savings of more than €15 billion per year, of which more than €4 billion will come from labour cost reductions, restructuring measures, production redeployment and optimal utilisation of plant facilities.” The annual reduction in labour costs amounts to €1.5 billion.

The employees and the Group have agreed to concentrate their efforts on Volkswagen Passenger Cars, with the aim, as the Group’s core brand, of becoming the technological leader in the global mass car manufacturing sector by 2030. In addition, production capacity at Volkswagen’s German plants will be strategically reduced by 734,000 units, ensuring more competitive production.