Portugal readies aid package for automakers

LISBON, Dec 3 (Reuters) - Portugal will announce an aid package for local automakers and parts producers on Wednesday, a government official said, in a bid to avoid job losses estimated at 12,000 in 2009.

"There will be financial aid for carmakers and parts manufacturers, as well as other anti-crisis measures, which will be announced today," said a spokeswoman at the economy ministry. She declined to elaborate.

Diario Economico business newspaper said the package would include a fund to promote consolidation mainly in the auto parts sector. It would also call for the use of cohesion funds Portugal receives from the European Union, and unspecified measures aimed at boosting sales and limiting imports.

Prime Minister Jose Socrates was due to give the green light to the project later on Wednesday at a meeting with industry representatives, the newspaper said.

The top three U.S. automakers are desperately seeking a government bailout of $34 billion to help them survive a collapse in sales. Combined U.S. sales slumped nearly 40 percent in November.

German carmakers' association VDA said on Wednesday forecast the country's passenger car market would reach its lowest level since German reunification in 1990 and the decline would affect employment.

Volkswagen AG (VOWG.DE) has a big car plant in Portugal, Autoeuropa, which produces over 90,000 cars a year, while Peugeot Citroen (PEUP.PA) and Mitsubishi (7211.T) also produce vehicles in the country. Along with parts manufacturers, the sector employs nearly 60,000 people in Portugal.

Diario Economico also quoted Helder Pedro, head of the Portugues Automobile Association, as saying sales were expected to fall 11 percent in 2009. He criticised heavy taxation on cars in the country and said government measures were unlikely to reverse the situation. (Reporting by Andrei Khalip, editing by Will Waterman)