Volkswagen is to invest a further EUR2.3bn (US$3.5bn) in Brazil on new products and manufacturing capacity expansion between 2009 and 2014 when it targets 1m sales a year in the country.

Board chairman Martin Winterkorn said: "Brazil is one of our most important growth markets worldwide. We expect demand there to rise significantly over the coming years and we are now systematically adjusting our manufacturing capacity."

Much of the investment will go into expanding capacity in Anchietá, Taubaté and the engine plant in São Carlos.

With a daily production capacity of 3,000 vehicles, Volkswagen do Brasil is already the country's largest automaker. VW also has the largest dealer network in the Brazilian automotive industry with 600 dealers across the country. Deliveries to customers have risen 70% since 2005 to 585,000 units in 2008. Local production will total some 800,000 vehicles this year.

Thomas Schmall, CEO Volkswagen do Brasil, said: "We will enjoy significant growth in Brazil this year and win market share. Our target is to sell 1m vehicles per year in Brazil by 2014, thus making an important contribution to the success of the group's 'Strategy 2018'."

Over the past two years, VW has renewed its product range in Brazil with the introduction of the locally made new Gol, Saveiro, Voyage and Fox. The updated Cross Fox will debut at the end of November. The Passat CC, Eos and Tiguan are imported.

Brazil is seen as a market with high growth potential. Statistics indicate there is at present only one vehicle per seven inhabitants. In Germany, this figure is one vehicle per two inhabitants. Forecasts indicate that vehicle density in Brazil will rise to approximately one vehicle per four inhabitants over the next five years.

Volkswagen passenger car deliveries during the first 10 months of 2009 rose to approximately 529,000 units (2008: 456,500, + 15.9%). Market share increased by 1.7% to 25.7%.

Brazil is the Volkswagen Group's third largest market after China and Germany.

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