Renault and Volkswagen are planning to expand their Brazilian manufacturing operations, at a combined cost of at least US$1.2bn, according to Brazilian newspaper Valor Economico.

The news comes as sales in Brazil are starting to slow, amid government rules introduced to slow auto credit growth, as well as a falling local economy.

Renault is preparing a major development in the southern state of Parana, according to Valor, and may also unveil a new Nissan plant. Renault has achieved a 10% market share on average around the world but is lagging in Brazil at just 5%, according to CEO Carlos Ghosn.

Volkswagen is considering whether to expand its existing three plants or build a new one, the report said. The company builds 3,600 cars per day and wants to increase that by 600 or 700 in the short-term, and 1,200 or 1,400 over the medium term, according to the head of Brazilian operations, Thomas Schmall, cited in the report.