Workers at Volkswagen's Mexico plant are seeking a 13.6 percent pay increase in contract talks between the plant's labour union and VW management that have got underway this week, according to a Reuters report.

The talks follow the union workers' agreement to work a four-day week in order to avoid 2,000 lay-offs. VW's Puebla plant has been hard hit by a slowing of export demand - more than 80% of its output is destined for export markets.

According to Reuters, the 9,800-strong union said it would strike from August 18 if no deal on a new contract had been reached.

However, union leader Jose Rodriguez struck a concessionary note in remarks reported by Reuters.

"Our salary demands are high, but they are subject to negotiation. It's very probable we can come to an agreement within our time frame," Rodriguez told Reuters.