(Bloomberg) -- Volkswagen AG cast its least-profitable quarter in years as cause for the first factory closures in Germany in its 87-year history, setting the stage for contentious negotiations with labor leaders.

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Operating profit plunged 42% to €2.86 billion ($3.1 billion) in the third quarter, with revenue also slipping from a year ago, Volkswagen said Wednesday. Its operating margin dwindled to just 3.6%, the lowest in over four years.

The results buttress Volkswagen management’s case for taking drastic measures in Germany, where union representatives are resisting the closing of at least three factories and the elimination of thousands of jobs. The company is also looking to reduce wages for around 140,000 workers by 10%, all of which would add to the woes of Europe’s largest economy.

The core VW brand — where most of those cuts would fall — earned just a 2.1% operating margin in the first nine months of the year.

“VW never had really high margins over the course of times, but these are different times,” Volkswagen Chief Financial Officer Arno Antlitz told reporters on a conference call. “VW is not earning the money it needs to spend for all the new products.”

Volkswagen’s preferred shares rose 0.7% as of 11:50 a.m. in Frankfurt trading, with some analysts describing the results as better than feared following two profit warnings in the span of three months. The shares have fallen 20% this year, ranking among the worst performers on Germany’s benchmark DAX Index.

Volkswagen reported earnings hours before the start of a second round of restructuring negotiations with labor leaders in Wolfsburg, where the company is headquartered. Unions are expected to put up a fight that could lead to strike actions in the coming months.

The automaker could save €2.5 billion annually — or about €1,900 per car sold in Europe — by shuttering plants, Bloomberg Intelligence analysts Michael Dean estimated in a note this week. VW’s factories in Emden, Hanover and Osnabrück are its most underutilized, based on just-auto data. Its Audi division already is planning to cease electric sport utility vehicle production early next year at a site in Brussels.