PUEBLA, Mexico -- Most workers at the Mexican unit of Volkswagen rejected a 4.45 percent salary rise offer from management hours before a Wednesday strike deadline.
The union has demanded an 8.5 percent salary increase and threatened to start strike action if there was no deal.
Nearly 10,000 unionized employees work at the Volkswagen plant, the only facility in the world that produces the New Beetle car that is exported to 80 countries.
The union said its members on early Wednesday rejected a Volkswagen offer of a 4.45 percent salary increase plus increases in non-salary benefits that would improve workers' overall package by 5.4 percent.
A union document obtained by Reuters at the plant in the central Mexican city of Puebla said the company proposal "was rejected by the majority of the unionized workers and as a result, (they) opted to strike at 11:00 a.m. today ... when our labor contract expires."
But talks between union leaders and the company were continuing. Volkswagen officials were not available for comment on Wednesday morning.
Volkswagen cut its 2004 production target in February to 235,000 vehicles from 250,000 because of a decline in export demand, especially from the United States.