Volkswagen won concessions on Tuesday allowing it to shift workers out of its expensive in-house wage agreement in return for building its new Golf sport utility vehicle Marrakesh at its main German plant in Wolfsburg, Reuters reported.

Workers’ representatives reportedly agreed to cut labour costs for the vehicle by €850 ($US1,025) per unit, averting VW’s threat of manufacturing the new SUV in lower-wage Portugal and securing around 1,000 German jobs.

VW sweetened the deal by committing to build two more models in Germany if they had an “economically viable basis”, Reuters added.

The news agency noted that analysts and investors have viewed the talks as decisive in management’s efforts to boost pretax profits by €4 billion to €5.1 billion by 2008 through its “ForMotion Plus” restructuring plan.

The VW brand alone is to cut costs by some €5 billion in the next three years, Reuters said, adding that the SUV will be built by Auto 5000 GmbH, a unit of VW that already builds the Touran compact van.

It uses lower-cost workers who do not fall under the brand’s in-house wage agreement that pays its staff of 103,000 the highest wages in the industry, the report said.

“To this end, approximately 1,000 apprentices at Volkswagen who will have completed their training in 2006 or 2007 will join the present workforce at Auto 5000,” the group told Reuters.

Union IG Metall told the news agency that under the current in-house wage agreement most Volkswagen apprentices who later join the brand’s workforce in Wolfsburg would have done so at lower wages anyway.

Moreover, under-utilisation at Wolfsburg would mean that their working hours would drop gradually over time, it said, according to Reuters.

“The cut in monthly wages would take them to below the level of Auto 5000 employees,” the union said in a statement cited by the news agency.

Reuters added that VW management also committed to build a new model under a modified in-house wage agreement from 2008 at its German plant in Emden, where it now builds the Passat mid-size saloon and estate cars.

“This assumes that an economically viable basis for the vehicle can be found,” VW reportedly said, adding that the details would be settled by mid-October.