Spain OKs $5.3B Auto Industry Rescue Plan

Spanish government Friday approved a $5.3 billion aid package for its struggling auto industry that includes support for the development and production of hybrid and electric vehicles.

MADRID (AP) -- The Spanish government Friday approved a 4.1 billion euro ($5.3 billion) aid plan for its struggling auto industry.

The package "is aimed at injecting competitiveness into one of the country's most strategic sectors, one which represents 6 percent of the GDP," said Deputy Prime Minister Maria Teresa Fernandez de la Vega.

She said the aid would be used to support the development and production of hybrid and electric vehicles, credit facilities to help people buy cars and improve transport logistics for the sector. She said the measures were also directed toward maintaining employment levels in the sector.

Some 350,000 people are employed in the auto industry in Spain but in recent months, manufacturers such as Ford, General Motors and Volkswagen AG's SEAT division have announced job and production cuts. The sector accounts for 20 percent of Spain's exports.

Car sales in Spain plummeted by 28 percent last year, the worst slump on record.

The package, approved at the weekly Cabinet meeting of ministers, is the latest effort by the Socialist government to try to lift Spain's economy out of the doldrums.

After posting years of strong growth, Spain's economy is now in recession, mainly because of a collapse in the construction industry. It has the highest unemployment rate in the European Union at 13.9 percent.

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