German carmaker Volkswagen is planning to invest about EUR3.4bn ($4.4bn) in refurbishing its model lineup and facilities in Brazil.
The investment, which runs through 2016, includes EUR126m to expand capacity at its engine facility in São Carlos to 4,800 engines per day from the current 3,800 units.
Volkswagen Board of Management chairman Dr. Martin Winterkorn said the Brazilian automobile market has significant growth potential.
"The Volkswagen Group will harness this growth and drive it forward: As an investor and innovation engine, as an employer, and by creating opportunities for people in this country," Winterkorn said.
"Brazil is very much a cornerstone of our Strategy 2018."
The firm will also invest EUR157m in the paint shop in its Taubaté plant that will manufacture up to 1,300 Volkswagen Gol and Voyage models per day.
Volkswagen Board of Management member Michael Macht said expansion of the paint shop in Taubaté is a further milestone in the Volkswagen Group's South America strategy.
"Apart from increasing our production capacity we will also be achieving a significant improvement in resource efficiency," Macht said.
Through its investment in Brazil, the carmaker is seeking support to counterbalance declining demand at its home market.
The investment also includes standardising facilities and installation of new technology to produce vehicles based on its MQB platform.
