Renault announced on March 16 it had chosen its factory in northern Spain to produce a new 1.4-liter engine, the first to be manufactured in its partnership with Japan's Nissan.
The decision will be good news for Spain's battered auto manufacturing sector, Europe's third biggest, which has been badly hit by the global economic downturn.
"The group renews its confidence in this factory" in Valladolid, said a spokeswoman for Renault in Spain.
The new TCe 130 engine will be the first to be produced in its alliance with Nissan, which is 44% owned by Renault. It will be installed in vehicles of Renault's Megane range, the company said.
Renault recently announced it was eliminating 400 temporary jobs at its Palencia plant in northern Spain, part of a program of production cuts by the French automaker in the country expected to affect more than 10,000 workers between January and May. The decision to produce the TCe 130 engine in Spain would mean "less need to impose" the cutbacks, the spokeswoman said.
The Spanish government has introduced a four-billion-euro aid package aimed at helping the country's ailing auto sector, which accounts for just under 10% of the country's economic output and 15% of exports.
Copyright Agence France-Presse, 2009