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General Motors do Brasil has said it would spend BRA$1.4bn (US$778m) on two plants in São Caetano do Sul and Mogi das Cruzes, both in the state of São Paulo.

“These investments will allow GM do Brasil to localise components with Brazilian suppliers, to increase production capacity and to update both plants to produce two new vehicles, based on global architectures, to be sold in the Brazilian market and also for export,” the automaker said in a statement.

“The definition of this new plan is part of our long term strategy of a total investment of R$5bn, within the 2008 through 2012 timeframe, which will allow us to modernise our plants, increase the production capacity and also completely renew our Chevrolet vehicle portfolio in Brazil,” said General Motors do Brasil and Mercosur president Jaime Ardila.

José Carlos Pinheiro Neto, vice-president of GM do Brasil, said the investment was self-financed with the cash generated by the Brazilian operations during the last years. “This is explicit evidence of GM’s commitment to Brazil,” he said.

From the R$5bn earmarked for Brazil, R$2bn will be used for developing a new vehicle family and also enlarging the GM plant in Gravataí. R$1.4bn will be used in Gravataí and the remaining R$600m in engineering costs at São Caetano do Sul and Indaiatuba plants.

As announced previously, resources of R$800m are being spent to build two new vehicles at the São José dos Campos complex (Vale do Paraíba Region), also in São Paulo state.

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By GlobalData

R$170m was spent expanding and modernising the Engineering and Design Technological Center in São Caetano do Sul and the Cruz Alta Proving Ground, located in Indaiatuba, including new laboratories and facilities.

There is potential for further investment to the end of 2012 as the remaining balance of the initial R$5bn, R$630m, has yet to be committed.