A rapidly expanding Brazilian market is seeing the country become an automotive hotspot. BMW and China’s JAC are the latest to look at establishing manufacturing here.

BMW said there is a “high probability” that it will build a factory in Brazil, currently one of the most dynamic auto markets in the world.

Chairman Norbert Reithofer told a news conference that a decision will be taken later this year, adding that BMW’s overall output currently exceeds capacity at 102%.

He also said the company was also considering significantly increasing capacity at its US plant in South Carolina.

JAC Motors said it is to invest US$600m in a Brazilian factory to boost its share of the booming market.

The plant is slated to open in 2014 with the capacity to produce 100,000 vehicles annually. The company’s business in Brazil is led by Sergio Habib, who brought the Citroen brand to the country in the 1990s.

In March he told Reuters he had invested $244 m to launch the JAC brand. He has opened 46 dealerships in the country with an aggressive television advertising campaign in the hope of winning a 3% market share, up from a current 0.7%.

Chinese brand Chery also broke ground at a new factory in the country last month. Automotive brands already there include Fiat, Volkswagen, General Motors, Ford, Suzuki, Honda, Hyundai and Renault-Nissan.

The Brazilian economy grew 7.5% last year and the number of middle class citizens has grown 25% in the past decade, making it a crucial growth market for carmakers.

By the middle of the decade, the country could overtake Germany as the world’s third largest car market thanks to a young population and solid income growth.

Vehicle sales have seen double-digit growth this year although they dipped to just 1% in July from a year earlier according to the dealership association Fenabrave, citing rising interest rates and government steps to curb credit which have increased the cost of car loans.

Four new automaking plants in Mercosur