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President Jose Mujica says he has received a million-dollar offer to buy his blue 1987 Volkswagen Beetle, which has become a symbol of the Uruguayan leader's austere lifestyle.

The man once nicknamed "the poorest president in the world" told the Uruguayan weekly Busqueda that an Arab sheik offered $1 million for the humble car. When asked about the reported offer at a news conference, Mujica said: "That's what they said to me, but I didn't give it any importance."

In an informal chat, Mexico's ambassador to Uruguay recently suggested to Mujica that he auction the Beetle in Mexico and predicted he could get 10 four-wheel-drive trucks for it, according to a spokesman for the Mexican Embassy who spoke on condition of anonymity because he was not authorised to talk with the press.

Mujica said that if got $1 million for the car, he would donate the money to a program he supports that gives housing to the homeless. If he got trucks for it, he said, they could go to Uruguay's public health office or his campaign workers.

The president said he would gladly auction the Beetle because he has "no commitment to cars" and he joked that he didn't sell it because of his dog Manuela, famous for only having three legs.

Asked why someone would pay a fortune for his little car, Mujica said: "Human beings have a bit of fetishism; we need certain material symbols." He noted that he keeps a hammer and shovel that belonged to his father. "They are little things to the world, but are worth a lot to you."

Mujica gained world renown when he assumed Uruguay's presidency in 2010 and declared that his entire wealth amounted to the 1987 Beetle. The ramshackle farm he lives on was in his wife's name.

Since then, in his official declarations of wealth, he has included the farm and he has been earning about $11,000 a month as president, of which he donates 20 percent to his political movement. Earlier this year he put his total wealth at $322,883, with the flower farm reportedly worth $108,000.