Associated Press reported that Volkswagen plans to invest $US2 billion US in Mexico over the next five years to revamp factories and accommodate production of its new Bora/Jetta model.

Reinhard Jung, head of Volkswagen’s Mexican operations, told AP that the Jetta, badged as the Bora outside North America, will be made only at the company’s Puebla plant, and shipped from there to Europe, the United States and other markets.

The plant expansion will create 1,500 direct jobs, and between 4,000 and 5,000 other jobs, mostly in the Mexican car parts industry, Jung told AP.

The Puebla plant, 60 miles/100 kilometres east of Mexico City, is the only production site of the New Beetle and its convertible version, the Beetle Cabrio, AP noted.

Mexico’s economy minister Luis Ernesto Derbez told AP that Volkswagen, the third-largest car manufacturer in Mexico after General Motors and DaimlerChrysler, is taking advantage of Mexico’s free-trade agreements with the United States, Canada and the European Union, as well as recent pacts with Argentina and Brazil.

Jung told AP that annual output at the Puebla plant is expected to increase to 430,000 units in 2005 from 332,000 last year.