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.

“We had three priorities in the negotiations: Reducing excess capacity at the German sites, reducing labour costs and reducing development costs to a competitive level,” VW brand CEO Thomas Schaefer said at a press conference in Berlin. In all three cases, the group had been able to find “viable solutions”, Mr Schaefer said.

Volkswagen AG and labor leaders are moving closer to an agreement to restructure the automaker’s namesake brand without shuttering factories in Germany, according to people familiar with the matter.