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.

Volkswagen AG and labor leaders reached an agreement to cut capacity at its namesake brand while avoiding factory closures, capping three months of tense negotiations and preventing further union walkouts.

Volkswagen and its employee representatives said Friday they have reached a wage deal for 120,000 German workers that avoids plant closings and bars involuntary layoffs through 2030. The agreement includes provisions for Volkswagen to shed more than 35,