Mercedes-Benz in Hungary has reached a deal with labour unions that will result in a 10% annual rise in base salaries for factory workers in each of the next two years, from next April.

The company has been in months of negotiations over pay levels for workers at its Kecskemét plant that makes compact Mercedes-Benz car models, including the CLA.

Reuters reported that a labour union, Vasas, had sought a 15% wage rise and staged a two-hour strike at the plant last month, delaying the shipment of around fifty cars.

Investments by German companies in central European manufacturing facilities have been driven by signifcantly lower costs than in Germany and especially lower labour costs.

Mercedes' Hungary plant is seeing more investment and the company announced in the summer that it would add a second plant at the site for the production of front- and rear-wheel-drive cars. Mercedes said the facility would add a flexible production facility, in which different vehicle architectures will roll off the assembly line.

Mercedes to create 2,500 new jobs with second Hungary plant