Volkswagen has decided to reduce production capacity at its troubled Spanish unit Seat at the expense of its profitable luxury unit Audi, CFO Hans Dieter Poetsch said.

In the future, Audi cars will also be assembled at Seat's production site in Spain, Financial Times Deutschland said.

Seat has been in the red for a long time already, causing a concern for the VW group. In the first nine months of the year, Seat suffered an operating loss of EUR218m, although it managed to increase sales by 10.6% to 260,000 units.

Volkswagen unit Bentley also suffered an operating loss of EUR145m in the period January to September 2010.