BERLIN >> Volkswagen told union leaders Tuesday that it was ending a labor agreement that protected workers from layoffs, a week after the automaker said it was considering closing factories in Germany.

The company warned last week that it needed to restructure its namesake brand to remain competitive in the face of falling demand in Europe and abroad and increased competition from China. The cost-saving measures could include closing one or two assembly plants in Germany, a step that would be a first in the auto manufacturer’s 87-year history.

On Tuesday, Volkswagen said in a statement that the decision to quit the agreement that offered job security to some 120,000 workers, along with other labor deals, was necessary to ensure the company’s future.

“We must put Volkswagen in a position to reduce costs in Germany to a competitive level in order to invest in new technologies and new products from our own resources,” Gunnar Kilian, the head of human resources and labor at Volkswagen, said in the statement.

The job security agreement between Volkswagen and the union, IG Metall, which represents workers in the automotive and other heavy industries, has existed since 1994. It had provided protection from layoffs through 2029, but the company would be able to sever it with three months’ notice.

The agreement will remain in effect until the end of the year, and through guarantees provided by other labor agreements, layoffs could begin only by June 2025, Volkswagen said.

Daniela Cavallo, who leads the works council at Volkswagen and is a member of IG Metall, vowed that the union would fight to defend the labor agreement. “We will put up a fierce resistance to this historic attack on our jobs,” Cavallo said in a statement. “With us, there will be no layoffs.”

Volkswagen is seeking to save 10 billion euros by 2026 to reach its earnings target of 6.5%. But it is losing out to electric vehicle manufacturers in China and increasingly feeling the pressure at home as those automakers expand in Europe.

New companies, many of them Chinese, have taken a 6% bite out of the market in Western Europe in the past four years, “leading to a smaller pie with a battle royale situation for market share,” Matthias Schmidt, an auto analyst in Berlin, wrote in a note.

Volkswagen said it was also ending other labor agreements, including one that obligated it to offer permanent positions to all vocational trainees and apprentices at the company, as well as a deal that offered temporary employees wages above the standard rate in the automotive industry.

The decision to quit the various agreements reflects how dire things are for Volkswagen, which has spent decades of building its brand around the image of superior quality linked to German engineering, said Helena Wisbert, a professor of automobile economics and director of the Center Automotive Research in Duisburg, Germany.

“Volkswagen operates in a very price-sensitive market, but has so far been able to charge a premium for its higher production costs in Germany as a ‘Made in Germany’ markup, since Volkswagen has always been associated with quality,” Wisbert said. “This calculation no longer works because the markets are not developing as expected and competition has increased significantly.”

Volkswagen and the union are expected to begin negotiations on a new wage deal this fall. The union is seeking a 7% pay increase, along with additional demands including averting plant closures.