PUEBLA, Mexico (AP) -- Workers at Volkswagen AG's plant in Mexico -- the only one in the world turning out the company's trademark new Beetle -- went on strike Tuesday after negotiations for a salary increase collapsed.
The union, which represents 9,400 workers, rejected the company's offer of a 1 percent pay increase starting in February and one-time bonus of 5,500 pesos ($425), union spokesman Arturo Monter said. Unionized workers, who earn an average pay of 370 pesos a day, are demanding an 8.25 percent salary raise.
Monter said the strike will paralyze production of 1,500 cars a day.
"The offer looks weak to us, given the economic situation we are going through," he told The Associated Press. "It is insufficient to meet our needs."
The company, which employs a total of 14,700 people in Mexico, said in a statement that it is "committed to continuing negotiations" if called back to the table by government mediators or the union.
Mexico's economic recession has hit the auto industry -- the country's biggest manufacturing sector -- especially hard.
Car production in the world's No. 10 automaker fell 25 percent in July compared to the same month last year due to lower domestic and foreign demand. Exports fell 26 percent, while domestic sales of new cars were down 34 percent.
Volkswagen's car production in Mexico fell nearly 37 percent between January and July of this year, compared to the same period in 2008, according to the Mexican Auto Industry Association.
However, the German carmaker said last month it would begin manufacturing a new compact sedan at its Puebla plant in 2010, an announcement President Felipe Calderon called rare good news for the ailing industry.
The Puebla plant is the only one in the world to produce Volkswagen's modern version of the Beetle. It was the last to produce the iconic old version, shutting that assembly line in 2003.
The last time Volkswagen workers in Mexico went on strike was in 2006.