Volkswagen plans to produce an SUV in Brazil, a media report said.

VW said in a statement cited by Reuters it would spend BRL2bn (US$595m) to manufacture the T-Cross compact SUV at its Sao Jose dos Pinhais plant in southern Brazil.

It will start selling the T-Cross in the first half of 2019, it said, adding the project was part of BRL7bn of planned investments to the end of 2020 to refresh the model line in its "largest product launch offensive ever" in Brazil.

Meanwhile, according to Reutersm Honda said separately it would consolidate all vehicle production in its Itirapina plant, converting a 20-year-old factory in Sumare from vehicles to engines and other parts.

The transition should be complete by 2021 at the plants, both of which are located in the state of Sao Paulo.

Honda announced the new Itirapina plant earlier this decade as a way to double capacity in Brazil amid booming domestic demand but the downturn interfered with the plans, a press officer told Reuters.

The government had said earlier Brazil's industrial output expanded in February at the slowest pace in five months, underscoring an uneven pace of economic recovery in the first quarter of the year.

The Itirapina plant was finished in April 2015 with capacity to produce 120,000 vehicles per year in two shifts but the carmaker has so far kept the lines there idle.

"Though the local market recently recovered, the growth outlook remains below volumes previously forecast," Honda said in a statement cited by Reuters.

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