LISBON (AFP) – General Motors will close its sole assembly plant in Portugal in December and transfer the production of its Combo vans to Spain due to cost advantages, the world's largest automaker said Tuesday in a statement.

The 75,000 Combos built annually at the plant at Azambuja, 50 kilometers (30 miles) northeast of Lisbon, will as of January 2007 be built at General Motors' larger plant in Zaragoza, Spain, the statement said.

The Azambuja plant employs 1,200 people, making it the company's smallest assembly plant in Europe. GM Europe President Carl-Peter Forster said in the statement that "the microeconomic conditions today allow no alternative to this production shift to Zaragoza."

In June the U.S. automaker said it cost 500 euros (637 dollars) more to produce a vehicle at its Portuguese plant compared with other possible locations which it did not name.

The closure of the plant is blow for Socialist Prime Minister Jose Socrates, who was elected in a landslide last year on promises to fight sluggish economic growth and rising unemployment in the nation of some 10.6 million.

The government has held talks with General Motors officials over the past month to try to save the plant, which has reportedly received some 30 million euros in state aid in recent years. The company said it had informed the Portuguese government that it was willing to "make an appropriate refund of any undeserved state aid."