Hyundai Motor Co. Ltd. averts a strike by reaching a tentative wage agreement with its unionized workers in South Korea, following two days of renewed negotiations.

“Everyone at headquarters is surprised and ecstatic that we have reached an agreement with our labor union,” a Hyundai spokesman tells Ward’s. “It’s the first time in 10 years that we have made a deal peacefully.”

Workers had authorized a strike, which was due to begin today, he says. “But the union leadership responded to management’s plea to continue to negotiate without industrial action.”

The 1-year settlement package includes a basic salary increase of 5.8%, 300% bonus of three months’ pay and 2 million won ($2,129) one-time lump sum bonus for settling without a strike.

“The union had asked for 30% of our 2006 net income but dropped that demand and instead accepted the bonus package that we offered,” the spokesman says. “We also extended the retirement age from 58 to 59.”

The union had asked for an 8.9% increase in base pay and 30% of the 2006 net profits.

A union ratification vote is to take place on Sept. 6, the same day that Hyundai Automotive Group Chairman Chung Mong-koo appears before the Seoul High Court to learn its decision regarding his appeal to have his 3-year prison sentence suspended.

Chung currently is free on bail, having been found guilty in February of embezzlement and breach-of-trust charges. His lawyers are pushing for a suspended sentence.

In addition to an average hike of 84,000 won ($90) in basic monthly salary, each union worker will receive 30 shares of Hyundai common stock. The agreement also increases a worker’s overtime wage scale an additional 3%.

Further, the amount of special supplemental salary is increased from 700% to 750%, a feature unique to Korean companies.

Instead of 12 months’ pay, Hyundai workers actually receive 19 months’ pay per year, which now goes to 19.5 months. They receive an extra month’s pay every two months, plus one month’s pay to celebrate the New Year holiday and one month’s pay to celebrate the Chuseok Thanksgiving holiday.

“This breakthrough marks a new beginning in the Hyundai labor-management relationship and a clear indication of mutual cooperation between the two parties,” Hyundai management says in a statement.

“This…will greatly help boost our brand image and competitiveness in the global auto market by increasing productivity and efficiency.”

Separately, the auto maker reportedly is cutting its 2007 U.S. sales target 8.1% to 510,000 units, blaming the country’s current credit crunch for stifling demand.

Hyundai sold 455,520 light vehicles in the U.S. last year, up 0.1% from 2005, Ward’s data shows.