General Motors is to invest an additional US$384.62m to modernise and boost production at its Caetano do Sul plant in Sao Paulo state, Brazil.

The company said the investment is being made to renew the production line at the plant that produces the Classic, Corsa, and Vectra models.

Brazil is GM’s third largest market after the United States and China. The company had sales of 206,600 cars in the first quarter of 2010, up 26% over the previous year.

Confidence in the Brazilian market is growing and global automakers are expected to invest up to US$11.2bn there over the next two years to meet demand for vehicles in Latin America’s largest economy.

Earlier this year GM said it would invest US$770m to modernise and expand its Sao Caetano do Sul and Mogi das Cruzes plants, both in Sao Paulo state, part of a long-term strategy to invest US$2.75bn between 2008 and 2012 to increase production capacity and renew the company’s portfolio of Chevrolet vehicles in the country.

Brazil is also a major market for Fiat, Volkswagen and Ford. Vehicle output in the country jumped 14.2% in April from a year earlier to 290,000 units as automakers pushed up production to meet a surge in demand in export and local markets.