Workers at Volkswagen's Mexico plant, where the popular New Beetles are made, went on strike on Friday after rejecting the company's offer of a 4 per cent pay rise.
About 9,700 union workers at Volkswagen's Puebla plant, east of Mexico City, are demanding an 8.5 per cent salary increase, and they rejected the company's lower proposal in a vote on Thursday.
Workers hung black-and-red strike flags at the main gate of the plant Friday morning after walking off the job.
"We will look for a better offer on both salaries and benefits," said union leader Jose Luis Rodriguez.
"If the company invests in state-of-the-art technology, it also has to invest in the quality of our jobs. The workers want to be working, but we also want salaries to improve our quality of life," he said.
Fifty-four per cent of union members rejected Volkswagen's offer and 46 percent supported it.
Some workers were not pleased with the strike.
"Some of us are not happy because there were people who agreed with the percentage increase," said one worker outside the plant who asked not to be named.
Volkswagen Mexico's spokesman Thomas Karig said a new round of negotiations with union and labor ministry representatives would be held on Friday afternoon.
"We are committed to ending this as soon as possible," Karig said on Friday.
Two years ago, union workers staged a four-day strike that ended with a 4.5 per cent wage increase plus benefits. Another strike in 2001 lasted 18 days before the two sides reached agreement.
The Puebla plant currently operates 24 hours, five days a week, and has daily production of 1,450 units, including 350 New Beetles.
It produced around 300,000 autos in 2005 and plans 350,000 units this year as Mexico's auto industry exports to the United States have surged.