BMW at the weekend said it had agreed to a contract extension for employees at a California warehouse following a union dispute that had threatened to go national.

"We had a good discussion with the Teamsters and we intend to extend the contract for six months to provide the time to address the substantive issues," company spokesman Tom Kowaleski told AFP.

The Teamsters, a nationwide union with some 1.4m members, had said the company planned to lay off the workers at the end of August before reopening the facility with a lower paid workforce.

"Many of these employees have worked at BMW for decades," said Bob Lennox of Teamsters Local 495, which represented the 68 workers.

"They were facing foreclosures on their homes and the loss of their health insurance at a time of record unemployment in southern California."

The Teamsters' national office had taken up the workers' cause and recruited political figures and other nationwide unions to express their solidarity, holding demonstrations at BMW dealerships across California.

The automaker reported record sales in July and said it was on track to setting a new record with the sale of 1.6m vehicles by the end of the year.

The company's second quarter net profit more than doubled from the same period a year earlier to EUR1.81bn (US$2.58bn) on sales that were 16.5% higher at almost EUR17.9bn.