Volkswagen's Mexican factory has cut its 2004 production target to 235,000 vehicles from 250,000 and may trim that further amid sluggish US demand, according to a union leader.

"At the end of January, the original production programme was changed to 235,000 units," Jose Luis Rodriguez, representing the company's 9,500 unionised workers, told Reuters.

"But there are fears it could fall further because of the decline in exports to the United States," he added.

A source at the company declined to confirm to Reuters it had pruned back its production outlook.

The news agency noted that Volkswagen Mexico announced in December an output goal of 250,000 vehicles for 2004 for its plant in the central Mexican state of Puebla, with a higher target of 440,000 vehicles for 2005.

Volkswagen sells more than 80% of its Mexican-produced cars in the United States and has been hit hard by the economic slowdown that took hold in its northern neighbour in early 2001, Reuters added.

The car maker, which produces its popular new Beetle exclusively in Mexico for export to 80 countries, turned out 287,253 vehicles in 2003, already a marked decline from the record 425,703 vehicles it made in 2000.

Volkswagen will next year start producing its new Golf, its best-selling model worldwide, at its Mexico plant, Reuters said.