Ford is to invest 800 million euros at its plant in Valencia, in eastern Spain and employ several hundred more people.
The expanded facility at Almussafes will build the next-generation of the Transit Connect van and Kuga car
It is part of Ford’s realignment of its manufacturing in Europe as the American car maker moves to launch at least twenty new or updated vehicles over the next three years.
Car sales in Spain have slumped in recent months with the end of government incentives as the country embarks on an austerity drive to tackle its budget deficit.
Car sales fell 23.3 percent in May, the 11th straight month of decline, car association ANFAC reported earlier this month.
The car industry accounts for around six percent of Spain’s gross domestic product.