FRANKFURT, Germany Volkswagens German factory workers will get a two-stage raise under a new wage deal reached as the automaker grapples with slipping sales and profit.

The company said Tuesday it agreed with the IG metall unio on increases of 3.4 per cent from Sept. 1 and 2.2 per cent from July 1 of next year through February 2015. The agreement covers 102,000 workers in six west German auto plants.

Volkswagen AG personnel head Horst Neumann said the deal went to the limit of what a tough auto market would allow.

Volkswagen, whose brands also include Audi, Porsche, SEAT and Skoda, saw profit fall 38 per cent in the first quarter as European car sales slumped in a recession. Sales of VW brand vehicles fell 7.9 per cent in the first four months of the year.