VW's Biggest-Ever Investment in Spain May Pave Way for A1

Volkswagen announces the largest-ever investment by an automaker in Spain, a €2.4 billion ($2.7 billion) outlay to be shared by VW subsidiary SEAT’s plants in Navarra and Barcelona and a technical center in Barcelona.

The biggest share of the investment is going to the SEAT Martorell plant in Barcelona, where production of the Altea will end in a few weeks, leaving it with the Leon range, refreshed Ibiza and Audi Q3. The investment will prepare the facility for production of a new-generation Ibiza, perhaps including a CUV, starting in 2018.

The investment raises the possibility production of the Audi A1 CUV could be transferred to Martorell from the VW plant in Brussels, as the Spanish factory already builds the Q3 and labor costs are lower there than in Belgium. VW plans to launch production of the next-generation A1 by 2017, a year ahead of the new Ibiza.

The Ibiza and Polo share the aging A05 mechanical platform likely to be replaced in the next generation of the two models.

Unions at Landaben long have sought to assemble more than one model. Adding the A1 to Polo production would fulfill that dream, but representatives of Martorell unions say it makes more sense to build the new CUV there because it will share a platform with the next-generation Ibiza.

Nabbing A1 production from Brussels might not be a clear-cut victory for Martorell if VW decides to transfer A3 output to its new facility in Mexico. However, the net loss might not be too great as the 110,000 A3 assemblies scheduled for Martorell this year could be replaced with the 116,000 A1 units slated at Brussels.

Launching Audi A1 output a year before new-generation SEAT Ibiza production gets under way is “an ideal situation that avoids an excessive work accumulation when preparing assembly lines,” an industry analyst says. “Moreover, in such a way (VW) gives an important advantage to the German product over the Spanish one – a complete year of sales.”