Volkswagen will spend EUR3.4bn by 2016 on its Brazilian plants.

"We have set the stage for sustained growth in Brazil," VW chairman Martin Winterkorn said in Sao Paulo, according to German daily Handelsblatt.

The automaker has operated in Brazil for over 50 years and has four plants in Brazil and around 23,000 employees.

It makes 21 models locally and builds around 3,500 units a day.