Volkswagen Mexico Reaches Wage Increase Agreement With Union

According to foreign media reports, Volkswagen Mexico has reached an agreement with the Independent Union of Automotive Industry Workers, under which both parties agreed to raise the wages of employees at Volkswagen’s large plant in Puebla, Mexico.

2025 Tiguan; Image source: Volkswagen

The agreement reached on August 18 includes a clause for a 4% increase in base salary. Volkswagen stated that this move ensures employees' purchasing power remains above the local inflation rate. Previously, Mexican Business News reported that the union originally sought a 14% salary increase.

A spokesperson for Volkswagen Mexico stated that the agreement covers the skilled workers group at the Puebla plant, involving 7,131 employees; the spokesperson also revealed that the validity period of the agreement is one year.

This latest contract focuses solely on wage negotiations, meaning that the agreement can take effect once consensus is reached at the union representative level. In 2026, both parties will negotiate wages as well as broader labor and collective bargaining agreements, at which time the relevant agreement will require approval through a vote by the employees.

Volkswagen Mexico stated in a statement: "The agreement sends a clear signal regarding the workforce stability at the Puebla plant, and workforce stability is a key factor in maintaining the plant's competitive and strategic operational position within the Volkswagen Group."

Volkswagen's Puebla plant began production in 1967 and is one of the oldest and most firmly established factories in Volkswagen Group's global network. The plant plays a crucial role in Volkswagen’s U.S. operations, being responsible for the production of the brand’s best-selling compact SUV Tiguan, the subcompact SUV Taos, and the compact sedan Jetta. Data shows that in 2024, 61% of Volkswagen vehicles sold in the U.S. market were produced at the Mexican plant.

It is noteworthy that the Volkswagen Jetta, Taos, and Tiguan models all meet the requirements of the United States-Mexico-Canada Agreement (USMCA), which means that only non-US components of these models are subject to tariffs, while components produced in Mexico that comply with USMCA requirements can still enjoy tariff exemptions.

In addition, as part of an agreement reached between Volkswagen and German labor unions in December 2024, the company announced that it would move production of the Golf hatchback and Golf Variant from Germany to Mexico in 2027.