Ryton looks set to be hit by strike action after Peugeot told the Transport and General Workers Union a disputed pay deal was its "final offer".
T&G members voted yesterday 865 in favour and 831 against a walk-out.
It now has 28 days in which to hold a strike.
The T&G is calling on Peugeot to re-open pay negotiations. The union objects to the company linking the 4.3% pay increase in year one and inflation-plus-0.7% increase in year two to a change in the August shutdown period.
Tony Woodley, union chief negotiator, said: "We have said from the start that Peugeot should not try to complicate our pay deal, but they ignored our warnings and advice. Consequently we have a result which clearly shows a great deal of unhappiness amongst the workforce.
"Our members know very well the pressures the car industry is facing at the moment. They have taken this into account when voting over this pay offer."
But a Peugeot spokesman said this afternoon: "We have made our final offer."
He said a strike would affect 206 production which was "regrettable", but that the company was only seeking to introduce fully flexible holidays, alongside a shorter August shutdown.
Members of the other trade union represented at Ryton, the AEEU, voted against strike action, 344 to 311.