Volkswagen will invest US$1.2bn in Brazil between 2007 and 2011.

Speaking at a press conference at the Sao Paulo motor show, the head of VW do Brasil, Hans-Christian Maergner, said the investment would be used to launch new models, according to AFX news.

Volkswagen produced 454,674 vehicles in Brazil in the first seven months of this year, according to the Brazilian automotive industry trade association, ANFAVEA.

Maergner (61), is due to retire at the end of this year and will be replaced by Thomas Schmall (42), current chairman of VW Slovakia.

He will report to Victor Klima (59), president of VW Argentina, who is due to assume overall responsibility for VW in South America at the end of the year. Klima will report to Francisco Javier Garcia Sanz, group board memeber for procurement and the South America region.

Volkswagen currently offers 16 models for sale in Brazil, but is in the process of restructuring to reduce the workforce, following a fall in demand for exports.

The next generation Volkswagen Fox will probably not be built in Brazil, because the appreciation of the Brazilian currency, the real, has made it prohibitively expensive to export. This suspicion was confirmed by a report in the German publication Auto Zeitung earlier this week, which quoted a Volkswagen spokesperson.