Spain offers 100 million euro incentive to VW: reports

(MADRID) - The Spanish government has made 100.7 million euros (515 million dollars) available to SEAT in a bid to persuade parent company Volkswagen to build a new Audi model in Spain, reports said Saturday.

The aid is part of an 800-million-euro package put together by the industry ministry in a bid to improve the competitiveness of the Spanish automobile sector which has been hard hit by the economic crisis.

Business daily El Economista said Industry Minister Miguel Sebastien had gone Wednesday to Volkswagen's headquarters in Germany to plead the case for having the new medium-sized 4x4 Audi Q3 made at SEAT's factory at Martorell in Catalonia.

But VW management demanded the 100-million-euro aid earmarked for SEAT be released merely to ensure that Martorell was not ruled out the running as an assembler of the Q3, the report added.

Madrid acted two days after Sebastien's mission, El Economista and its rival Cinco Dias said.

The 800-million-euro package for the industry is considered inadequate by Spanish car firms, which are largely subsidiaries of the main world manufacturers.

The sector accounts for six percent of the country's gross national product and employs 350,000 people directly or indirectly. But many have been laid off and most of SEAT's 11,000 workers recently agreed to a pay freeze in a bid to keep their jobs.