Volkswagen has announced that it will be cutting more than 35,000 jobs by the end of the decade following tense negotiations with unions, although it has avoided closing any plants.

The "Future Volkswagen" ("Zukunft Volkswagen") agreement has been reached between the German manufacturer, IG Metall and the Works Council to outline measures to ensure a sustainable future and success.

In a bid to cut labour costs by €1.5billion (£1.25billion), Volkswagen will cut 35,000 jobs across the brand's German sites by 2030 as part of a "socially responsible reduction in the workforce".

The manufacturing giant will also reduce the capacity of 734,000 units across its German plants as well as "structural production methods".

The decision was made after mass protests from VW workers

Volkswagen clarified that it does not expect any significant impact on the outlook for the 2024 financial year. The original announcement, in which it warned that three factories could be closed, was met with massive protests from Germany's biggest union - IG Metall.

Commenting on the new decision, Oliver Blume, CEO of the Volkswagen Group, said: "Following the long and intensive negotiations, the agreement is an important signal for the future viability of the Volkswagen brand, Volkswagen Commercial Vehicles and the component plants.

"With the package of measures that has been agreed, the company has set a decisive course for its future in terms of costs, capacities and structures. We are now back in a position to successfully shape our own destiny.

"The Board of Management and the wider management team are making a greater than proportional financial contribution."

Volkswagen also announced a number of changes to the future of its factories around Germany.

A number of further changes could be made in the coming years

The brand also announced that it would be reviewing factory costs at sites in Kassel, Braunschweig, Salzgitter, Hannover, Wolfsburg and Chemnitz.

Thomas Schäfer, CEO of the Volkswagen Passenger Cars brand, added: "We have set ourselves three priorities for the future of the Volkswagen brand: Reduce overcapacity in Germany, reduce labour costs and achieve competitive development costs.

"The negotiations have led to viable results in all three areas. With the agreed package of measures, we are in a position to largely close the gap in our performance programme.

"We have thus created the basis for making Volkswagen the technologically leading volume manufacturer by 2030 - with a clear plan, strong products and a clear commitment to Germany as a business location."