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.

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 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.

Volkswagen announced sweeping changes to its German operations on Friday (December 20), 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.