Volkswagen has reached an agreement with a workers' union at its Puebla plant in Mexico to end a strike that began last week.

According to the country's labour ministry over 9,000 workers will receive a 3% wage increase and a one-time payment of 2,000 pesos (US$155).

VW said in statement: "Due to the results of this revision, Volkswagen's labour costs in Puebla continue to rise, while the rest of the auto industry in Mexico hasn't given salary increases this year. This will force the company to reinforce measures to improve its production levels."

Bloomberg News noted that the company had been scaling back production in Mexico, temporarily trimming output of four models in June as vehicle sales slowed. Mexico's auto production will fall 30% this year because of slow US demand, according to the Mexican Automobile Industry Association.

The workers at Puebla had rejected an offer of a 1% salary increase beginning in February and a one-time payment of 5,500 pesos ($425), Volkswagen said last week. The company produced 449,096 cars in Mexico last year.