Union leaders at Volkswagen's plant in Mexico, the only one that builds its popular New Beetle [and which will soon be the sole source plant for the Jetta saloon line], are demanding a 12.5% salary increase with a strike deadline set for next week, according to Reuters.

Miguel Angel Galan, the union's spokesman, on Thursday told the news agency that Volkswagen AG has yet to make a counter-offer, although the two sides were to meet again for talks on Friday.

"The situation is difficult. The company has said it is not going to make a spectacular (salary) adjustment," Galan told Reuters. "But the (union) colleagues don't want a strike."

The strike deadline is next Thursday.

Reuters noted that almost 10,000 union workers at the plant in Puebla, which east of Mexico City, walked out last year in a three-day strike that ended with a 4.5% wage increase plus non-salary benefits.