After signature of a joint venture agreement between Volkswagen Group and Ford in July 1991, the 2million sqm plant was built in four years, including a surrounding industrial park on which key suppliers are located.
Opened as a 50/50 joint-venture, its initial purpose was to assemble a communal-designed MPV model sold under three marques: Volkswagen Sharan, SEAT Alhambra, and Ford Galaxy. Producing these vehicles, AutoEuropa almost reached its production limit of 172,500 units per year.
However, when Ford left the joint-venture and the model life-cycle approached its end, Volkswagen took ownership of the plant and production declined considerably. Under Volkswagen's internal bidding system, the plant had to compete for new models with other Volkswagen plants, while threatening to close the plant and to give concessions to the workers and the State.
Eventually, AutoEuropa won the production of the new model Volkswagen Eos from late 2005, producing just 79,896 vehicles of the original models plus the Eos. In 2008 the plant started production of the third generation variant of the Volkswagen Scirocco, and presently employs 3000 people on site, 2350 supplier jobs on the industrial park, and an additional 3750 supplier jobs within Portugal.
As the existing models come to the end of their life cycles, the plant will need to compete for new models from 2010 onwards. It was proposed that in 2009 the production line will be prepared for the replacement, although the economic crisis will delay that model.
Internal sources say AutoEuropa is to take up production of the Volkswagen Polo by latest November 2010 as a 2011 showroom model, a sub-compact sold everywhere but the US and Canada. The factory management are also bidding for production of the new Volkswagen BlueSport roadster.