Seat has negotiated a deal with a majority of its Spanish workers that will see them accept a two-year salary freeze in exchange for owner Volkswagen assigning the Martorell factory a new car model to build.

A union source told Reuters about 65% of the workers had agreed to the deal. Rejection could have seen about 1,500 jobs, or 20% of the workforce, axed.

The plant on the outskirts of Barcelona now hoped to build the upcoming Audi Q3 small SUV.

Spain’s car industry has slowed so severely that output is expected to plummet 25% in the 2007-09 period, bringing the industry back to 1994 production levels, according to manufacturers’ federation Anfac.

In January, it said 2009 would be a “very complicated year” for the industry as there were no visible recovery signs following December’s 50% year-on-year sales plunge and a “very negative” 2008.

The gloomy data came as sales were forecast to fall at least 10% this year after dropping 28% in 2008 (to 1996 levels) though some observers branded the fresh projections as too optimistic.