SAO PAULO, Brazil -- General Motors plans to invest $240 million to expand a plant in southern Brazil where it will produce a new model, with Brazil winning out over possible projects in China and Mexico, a spokesman for GM's Brazilian unit said.
The investment would increase production at the Gravatai plant, in the southern state of Rio Grande do Sul, to 210,000 Celta model cars from the current 120,000 by 2006, he said.
The news of the investment could represent a new lease on life for Brazil's auto sector. High interest rates and an economic slump last year led to layoffs and a 3.4 percent drop in annual sales to their lowest level since 1999.
The announcement of the investment will be made officially by GM Chairman and Chief Executive Officer Rick Wagoner on Feb. 5, the spokesman said.
GM has been operating in Brazil for 79 years and currently has three plants in the country. The company sold 333,420 vehicles in Brazil last year, a 1.5 percent drop compared with 2002. It was second in Brazilian vehicle sales behind Fiat SpA.