Volkswagen AG managers are facing hefty pay reductions in the coming years as part of an agreement with labor to make Europe’s biggest automaker more competitive.

Volkswagen on Friday announced sweeping changes to its German operations, including more than 35,000 future job cuts and sharp capacity reductions in a last-gasp deal between Europe's top carmaker and unions to avert mass strikes.

VW Group threatened to close up to three plants in Germany, but a deal with workers means those plants are safe.

Volkswagen announced sweeping changes to its German operations, including more than 35,000 future job cuts and capacity reductions in a last gasp deal between Europe’s top carmaker and unions on Friday to avert mass strikes.

A reduction in managers' bonuses at Volkswagen will lead to a 10% pay cut for the next two years, the Sueddeutsche Zeitung newspaper reported on Sunday, after the German carmaker struck a deal with unions to axe jobs and scale back production.

While hailed as a Christmas miracle by union leaders, the agreement forces significant concessions from the workforce, including a wage freeze until 2027, reduced bonuses, and the "socially responsible" elimination of over 35,000 jobs by 2030, primarily through early retirement and attrition.