Volkswagen is expected to spend about $2bn on a new Audi plant to be built in a yet-to-be-disclosed location in Mexico, two people familiar with the deal have said.

There were no other details in a Reuters report.

Audi had said in January it would not make a decision on whether to produce cars in the US before 2015 and would increase capacity at existing sites, such as Gyor in Hungary, until then.

However, an Audi statement said the exact location for the new plant, which will manufacture an SUV model starting in 2016, would be chosen later this year.

“As an established carmaking location, Mexico offers an excellent economic basis for Audi production operations,” said chairman Rupert Stadler.

The group parent Volkswagen already has an automotive plant in Puebla and an engine plant in Silao.

“Good infrastructure, competitive cost structures and existing free trade agreements played a significant role in the choice of Mexico,” said Stadler.

Regarding location, HR chief Thomas Sigi said: “The factors that we will take into account include not just the specifics of the real estate and its logistical links.” He also cited quality of life as a decisive criterion. “It is important for us to be able to find well-qualified employees there,” referring to the need for an effective infrastructure of schools and universities.