Volkswagen Increases Spain Investment

Volkswagen Increases Spain Investment

Volkswagen Increases Spain Investment

Spain’s auto-mobile industry received a double dose of good news last month: another extension to the government’s sector subsidy scheme and a 4.2 billion euros five-year investment commitment from Volkswagen!

The German car manufacturer has earmarked the cash for improving installations and R&D at its two plants, one of which is its Seat factory in Martorell, near Barcelona, and the other in Pamplona in Navarre, home to the VW Polo.

Spain is a key market for Volkswagen and its latest project – which has been touted as the largest ever industrial investment in the country – will guarantee the future of the group’s facilities.

It will boost production of existing models and add new ones, details of which are still to be revealed by the automotive giant.

In 2014, the combined vehicle output of the Martorell and Pamplona plants rose 13.1 percent from a year earlier to 748,400 units.



Spain’s car industry was traditionally one of the drivers of the economy, but it lost productivity between 2000 and 2007, when a real estate boom became the pillar of growth.

Austerity measures to combat the effects of the global crisis, such as sharp rises in VAT, further depressed the auto business.
But there was a silver lining in the austerity cloud. Due in part to government measures to moderate wage increases, the industry gradually regained its competitiveness.

The labour market is an estimated 40 percent less expensive than those of other big car-making countries like Germany and France. Therefore, it is not surprising that some of Volkswagen’s peers, like the US’ Ford Motor Company, have been keen to boost capacity at their Spanish plants.

And almost 90 percent of the cars made in Spain are destined for exports, a sector which has led the economic recovery over the last 18 months.

The government’s scrappage programme for car buyers has also helped to boost the sector’s performance and sales over the last few years. The state coffers are expected to contribute about 225 million euros to the latest edition of the Plan Pive.



Apart from demonstrating its confidence in Spain’s economic revival, Volkswagen’s investment pledge will also create jobs, crucial for a country where the unemployment rate is still running at over 20 percent.

Apart from building new models at its Spanish plants, the German firm also plans to increase the supply of parts and components manufactured in Spain, which will benefit this auxiliary industry in terms of activity and employment opportunities.

For information on investment in Spain, contact corporate law firm Argali Abogados.

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