Volkswagen plans to invest 500 million euros over five years in its Portuguese multi-purpose vehicle (minivan) plant, chief executive Bernd Pischetsrieder said, according to Reuters.

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Speaking at a ceremony to mark the production of the millionth vehicle at the Autoeuropa plant in Palmela, 30 km (20 miles) south of Lisbon, Pischetsrieder said he had met Prime Minister Jose Manuel Durao Barroso to discuss the plant’s future, Reuters said.


“Beyond the investment of 2.2 billion euros (thus far), there should be an increase of 500 million euros in the next few years in this factory,” Pischetsrieder reportedly said through an interpreter.


Reuters noted that investment details were not available and added that the plant started output in 1995 and makes Volkswagen’s Sharan, the Seat Alhambra and the Ford Galaxy.


The Volkswagen executive declined to answer questions after his address about whether the company would cut output in Western Europe, Reuters said.

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The news agency noted that Pischetsrieder said last week that Volkswagen needed to cut costs significantly and did not expect economic recovery in western markets in the short term.


According to Reuters, Durao Barroso said his centre-right government wanted to improve conditions for investment, including possibly dropping the costs of electricity.


“I assured (the Volkswagen executives) of our willingness to make businesses’ lives easier in our country, not just for national companies but for international ones,” he told Reuters on the sidelines of the ceremony.


Reuters noted that Autoeuropa executives have complained about electricity costs, saying they were higher than in Spain, and have sought a drop in rates. The energy regulatory agency has ordered a reduction in rates in the third quarter.


Reuters said the Autoeuropa plant accounts for some 8% of Portugal’s exports and about 1.8% of its gross domestic product.