Germany's Volkswagen AG on Friday announced plans to invest euro2.3 billion ($3.5 billion) in Brazil and said it hopes to be building a million vehicles a year in the country by 2014.
Volkswagen said the planned investment through 2014 is aimed at increasing production capacity and developing new models. It expects to produce some 800,000 vehicles in the South American country this year.
VW, based in Wolfsburg and Europe's biggest auto maker, said it will expand production capacity at its Anchieta and Taubate vehicle production plants and at an engine plant in Sao Carlos.
Brazil is the company's third largest market after China and Germany.
Volkswagen said deliveries to Brazilian customers rose by 70 percent since 2005 to reach 585,000 vehicles last year.
"The Volkswagen group will strengthen its leading competitive position in Brazil over the long term with these investments," chief executive Martin Winterkorn said.
"Brazil is one of our most important growth markets worldwide," he added. "We expect demand there to rise significantly over the coming years and we are now systematically adjusting our manufacturing capacity."
Volkswagen announced last week that it would make nearly euro30 billion ($45 billion) in investments around the world to upgrade its operations and to modernize and expand its product range over the next several years.
Shares of VW were 2.2 percent lower at euro79.20 in Frankfurt morning trading.
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