UPDATE 1-Audi: no need for US site, to build new SUV in Spain

Wed Apr 22, 2009 10:15am BST

Related Topics

* Postpones decision to build in U.S.

* To invest 300 million euros in Barcelona plant

* Will build 80,000 units of Q3 model from 2011

(Adds comment on U.S., context on Spain, Seat)

FRANKFURT/MADRID, April 22 (Reuters) - Volkswagen's premium brand Audi has, for now, decided not to make cars in the United States, choosing Barcelona as the site to manufacture its new Q3 compact sport utility vehicle.

The German carmaker said on Wednesday it would postpone any decision to build vehicles in the U.S. "Audi is in a good position. There is currently no urgent need to select additional sites."

Due to the importance of SUVs in the U.S. car market, German automakers like BMW and Daimler's Mercedes-Benz manufacture those models at plants in the southern United States.

Audi said it would invest about 300 million euros ($387 million) in the Seat plant in Martorell near Barcelona, where it will begin building the Q3 in 2011.

The decision, after heavy lobbying from Spain, is a boost for an administration lashed by an economic crisis that has seen 1.3 million jobs lost in the past 12 months.

Spanish Prime Minister Jose Luis Rodriguez Zapatero said Audi's move would safeguard 7,500 jobs.

Audi said on Wednesday that capacity would allow for up to 80,000 Q3s to be built per year.

"We will use the group's synergies to sharpen our competitive edge and help protect around 1,200 jobs," Audi Chief Executive Rupert Stadler said in a statement.#

A union source told Reuters last month that Seat workers at the Martorell plant accepted a two-year pay freeze to secure production of the Q3.

Seat has been a chronic underperformer for the Volkswagen group, with a dangerous overreliance on its domestic Spanish market, where March car sales fell 38.7 percent year on year.

(Reporting by Christiaan Hetzner in Frankfurt and Ben Harding and Manuel Maria Ruiz in Madrid; editing by John Stonestreet)

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