Stuart Dyos  I  Nashville Tennessean  I  Updated Feb. 5, 2026, 2:54 p.m. CT

Volkswagen and the United Auto Workers settled on a tentative agreement late Wednesday night, marking the first union deal in the South outside of General Motors, Ford and Stellantis. 

The announcement follows a standoff after the UAW rebuffed Volkswagen’s “last, best and final” offer made in October. The agreement “reflects significant improvements” over the automaker's proposal, according to a UAW news release. 

The roughly 3,200 plant workers will receive a 20% wage increase, affordable health care and job security, according to the release.

“For years, Chattanooga workers were told to settle for less while Volkswagen made record profits,” UAW President Shawn Fain said. “So the workers stood together and won their union — and now they’ve secured a life-changing first agreement.” 

Volkswagen spokesperson Michael Lowder confirmed the agreement to The Tennessean. 

“This comprehensive agreement will provide meaningful changes for our workforce, including increased wages, reduced health care costs and more paid time off,” Lowder said. “All these benefits recognize and reward the hard work and dedication our team members give every day.” 

In April 2024, Chattanooga plant workers voted 73% in favor of joining the union, making it the first plant to unionize via an election in the South.

“This contract is proof that if you stand up and stick together, you can win a better life,” VW Chattanooga paint department worker Kelcey Smith said in the release. “No matter where you live, or where you work, autoworkers deserve a union contract whether at the Big Three or Volkswagen, from Detroit to Chattanooga. Volkswagen workers are showing the whole country what’s possible.”

Contractual stalemate

Following the final offer in October, the UAW pushed back against VW, condemning the automaker’s domineering tactics. 

“We know that this is not the last and final offer, we just want Volkswagen to stop the intimidation," United Auto Workers VW bargaining committee member and Volkswagen Chattanooga assembly worker Yogi People told The Tennessean. 

Volkswagen officials had encouraged UAW members to accept the offer, citing reports from employees in favor of it. 

“We’ve received positive feedback on our offer from employees and continue to urge the UAW to give them a say and let them vote before calling a strike,” a Volkswagen spokesperson told The Tennessean. 

Then, the UAW called for a strike authorization vote, meaning the union would carry the power to call a strike. 

The vote approved the authorization, but a walkout never happened. 

Volkswagen Chattanooga body shop team leader Lindsey Cline told The Tennessean the contract “looked like a really good deal” but the plant’s workers were restricted in moving forward.

“The union has not allowed us to vote on it,” he said in a Jan. 6 interview. 

Cline, who was speaking on his own behalf, said the UAW had gone back to the negotiating table to discuss specific topics. 

“The only major thing that the UAW seemed to be standing firm on was they wanted job security so that the plant wouldn’t change the name or close,” he said.