Volkswagen is to invest over 1 billion DM ($US469 million) in Slovakia over the next two years, according to Prime Minister Mikulas Dzurinda.

He announced the deal after meeting with VW chairman Ferdinand Piech at the World Economic Forum in Davos, Switzerland on Sunday.

Dzurina said that VW Slovakia’s production of the all-terrain Colorado vehicle will create 2,500 jobs, with a further 1,000 posts at a new components facility near Malacky, expected to open in the summer.

The annual output from VW Slovakia is set to rise by 90,000 to 270,000 units.