Audi chairman Martin Winterkorn, responsible overall for the SEAT brand within VW Group, has said the Spanish subsidiary must cut costs and raise sales by mid-2006, and warned that job losses cannot be ruled out.

However, Winterkorn denied any possibility that the loss-making SEAT business could see factory closures or be closed down entirely. SEAT sales dropped 9% in the first half of this year compared to the same period of 2004, in which year they dropped by 4%.

VW Group’s 'ForMotion' cost-cutting plan envisages the achievement of savings of €10bn (£6.8bn) by 2008, and all subsidiary car brands and VW’s LCV unit are each targeted for savings of up to €3bn, with procurement costs being a strong focus.