PUEBLA, Mexico, Aug 18 (Reuters) - The Mexican subsidiary of German car giant Volkswagen AG and its union workers agreed on Sunday to extend salary negotiations until September and avoid an all-out strike at the mega Mexico plant.
"Volkswagen de Mexico has communicated its decision to extend until Sept. 3 the strike deadline that was originally set for today at 11:00 am (1600 GMT)," the company said in a statement.
Workers asked for the extension on Saturday as both sides seemed far from reaching an agreement.
Over 10,500 union workers at Volkswagen's Puebla, Mexico plant are asking the German car giant for a 10.2-percent wage hike and a 4.0 percent raise in benefits.
The plant, which is VW's sole manufacturer of the New Beetle, will continue to operate while workers and the company negotiate over coming weeks.
On Saturday union workers said VW offered them a 3.5-percent wage hike on the condition of a drop in benefits.
VW workers have gone on strike twice in the past two years, the most recent strike having lasted 19 days in 2001. The strike was called off after the company agreed to raise wages by 10.2 percent and benefits by 4.5 percent.
In 2000, VW workers won a raise of 18 percent plus a 3.0-percent increase in benefits.