Automotive manufacturer Stellantis NV signed an agreement with unions on Thursday to extend the working hour reduction plan at the historic Mirafiori factory in northern Italy for an additional five months.

The agreement enables the company to cut labor costs amid weak demand for Italian-made vehicles, consistent with similar agreements signed for other Italian facilities this month.

Workers under the reduced working hours arrangement will face temporary pay cuts. Stellantis NV stated in a release that the latest agreement for the Mirafiori plant is effective from September 1 through January 31 of next year.

The Mirafiori factory is located in Turin, the birthplace of Fiat, an Italian brand under the Stellantis NV umbrella. Once one of Europe's largest automotive manufacturing facilities, the plant has been in prolonged decline.

Stellantis NV is pinning hopes on a hybrid version of the Fiat 500 city car to revitalize the facility, with production of this model expected to commence in November.

Gianni Mannori from the Italian metalworkers' union Fiom-CGIL called on the company to "assign another vehicle model to the Mirafiori plant as soon as possible" to maintain the facility's production operations.

Stellantis NV was established in 2021 through the merger of Fiat-Chrysler and PSA Group, the parent company of Peugeot. Last year, the group's automotive production in Italy fell to its lowest level in nearly 70 years.