Toyota has announced that it has expanded production capacity for the Corolla passenger car at its manufacturing plant in Brazil. The move comes amid growing concern about overcapacity in the Mercosul region following the collapse of demand in Argentina.

Toyota production capacity has been expanded from 15,000 units per year to 57,000 units at Indaiatuba Plant of Toyota do Brasil Ltda.

The Brazilian plant has been building Corollas in the state of Sao Paulo since 1998 and started producing the ninth-generation Corolla at the end of May this year.

Toyota says that the expansion at Indaiatuba involves additional investment of approximately $300 million.

This week Volkswagen‘s local boss said that he expects two carmakers to leave Brazil and Argentina within the next two years as capacity exceeds demand by around 50%.

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Herbert Demel told Gazeta Mercantil: “We have a zoo with more beasts than meat to feed them.”