A historic shift is underway for Volkswagen as the production of its flagship Golf model is set to close in Wolfsburg, Germany.
The production will be moved to Puebla, Mexico, following a new agreement with the IG Metall trade union.
The "Zukunft Volkswagen" agreement was finalized on Friday, according to a press release. It outlines a major cost-cutting plan that includes 35,000 job cuts in Germany and the closure of multiple factories.
Volkswagen aims to reduce domestic production capacity by 734,000 vehicles annually, saving the company approximately $489 million.
Since its debut in 1974, the Volkswagen Golf has been manufactured in Wolfsburg, a city synonymous with the brand's heritage.
But, in two years, Golf production will shift to Mexico, where the Puebla factory will take over its assembly.
Moving forward, the Wolfsburg plant will focus on electric vehicles, producing models such as the ID.3, Cupra Born, and a newly envisioned electric Golf, expected by the end of the decade.
Factory Closures and Reduced Output
Other facilities in Germany are also facing dramatic changes:
Dresden: The electric car production plant will close entirely by the end of 2025, though Volkswagen hinted it might find use in a third-party program.
Osnabrück: Production of the T-Roc Cabriolet will cease in 2027 unless alternative arrangements are made.
Zwickau: Electric car production is being scaled back, with the Audi Q4 e-tron becoming the primary focus. ID.4 production will be relocated to Emden, where the ID.7 and ID.7 Tourer are already manufactured.
Volkswagen originally proposed even more extensive cuts but faced pushback from IG Metall and the state of Lower Saxony, which holds a significant ownership stake in the company. Despite this, CEO Oliver Blume believes the measures are sufficient to safeguard the company's future.
"The agreement is an important signal for the future profitability of the Volkswagen brand and its operations," said Blume. "With these measures, we are now back in a position to successfully shape our own destiny."
