Mexican car workers stage walkout

Volkswagen's profits fell last year

Workers at a Volkswagen car plant in Mexico are striking in a row over pay.

Staff walked out of the factory south of Mexico City on Wednesday morning after calling for a 8.5% pay rise.

The Puebla factory, which employs 9,500 staff and is one of Mexico's largest car plants, is VW's sole manufacturing centre for its New Beetle model.

Talks between management and unions were expected to resume later on Wednesday in an effort to resolve the strike, the first in three years.

Unions representing the plant's 9,500 staff have rejected a 4.5% pay rise.

The factory has a history of labour disputes.

Beetle icon

Workers were on the verge of strike action last year before accepting a 5.25% rise.

In 2001, staff stopped work for 18 days before settling upon a 10.2% pay deal.

The factory was the last in the world to manufacture VW's iconic Beetle before it ceased production last year.

Two thousand jobs were subsequently cut. The factory also produces VW's Jetta model.

Volkswagen suffered a 20% fall in profits in the first half of 2004.

The German manufacturer is cutting costs across its global operations in an effort to make savings of £550m in the current financial year.