German tyre and automotive supplier Continental AG will invest €250 million euros ($US309 million) to boost production in Brazil and Malaysia over the next few years.

A Reuters report said the company plans to manufacture an additional seven million passenger car tyres and 700,000 truck tyres by 2008.

It reportedly said in a statement it will create a new plant in Camacari in Bahia, Brazil, and will expand its existing Malaysian production in Kuala Lumpur and Alor Star jointly with its partner Sime Darby.

Production in Brazil is set to start at the end of 2005 or beginning of 2006, Reuters added.

The report said most of the additional tyres produced will be exported to the North American Free Trade Agreement market.

"The new lower cost capacity provide us with a key to turning around and profitably growing our car tyre business in the NAFTA region," management board member Martien de Louw said, according to Reuters.

"We expect that the NAFTA market will grow by 11% to 382 million car tyres, and we're preparing for this," he reportedly added.

Reuters noted that Continental has been plagued by problems in its loss-making North American business despite raising its earnings guidance twice in 2003.

The Hanover-based tyre maker reportedly said it was continuing to search for a partner to jointly invest in China.