Super sports carmaker Lamborghini has confirmed it will enter the luxury SUV market and has signed a deal to produce the vehicle in Italy after receiving more than 80 million euros ($87 million) in government incentives.

Premier Matteo Renzi signed the deal, which is expected to create 500 jobs, at a ceremony in Rome with Lamborghini executives.

Lamborghini CEO Stephan Winkelmann said the Italian package "was the most competitive and won" against a rival bid from Slovakia.

The Urus SUV, unveiled as a concept in 2012, is expected to enter the market in 2018 with a production of 3,000 vehicles a year, more than doubling production at Lamborghini's factory near Bologna.

The move broadens Lamborghini's portfolio beyond super sports cars, while creating jobs in Italy's long-suffering auto sector.