This article discusses the changes taking place in the Brazilian vehicle assembly industry of the 1990s with particular reference to the state of Rio de Janeiro, Brazil. It focuses upon a case study of Volkswagen’s bus and truck assembly plant, opened in 1996, and its workers at Resende. The experience of the `modular system’ of production has been presented as a major development in vehicle assembly. The article analyses the originality of VW’s new form of organization of production and the strategy of the firm to look for localities with weak labour unionism. It also argues that despite the difficulties the local union faced in its attempts to intervene in the process of wage bargaining and to influence the management of aspects of production, there has been a rapid process of mobilizing the new workers for effective labour union action.