German automaker Volkswagen is set to invest $2 billion in a new factory in far northeastern Brazil, a specialty publication said Wednesday.
The German firm and officials in Pernambuco state are finalizing the details of the deal, the Valor Economico daily reported, without citing sources.
Plans are for the factory to be built in Cabo de Santo Agostinho, a town some 50 kilometers (30 miles) south of the regional capital Recife, in the Suape industrial port area.
The factory is being built to produce 200,000 popular brand vehicles a year.
A spokesman for Volkswagen in Brazil said that the company was "looking at the possibility of boosting its production capacity in the country, either via a new factory or with an increase in production at existing factories."
VW is doing research in several states, but no decision has been made, he said in a statement.
There are about 30 million vehicles in Brazil, a country with a population of 191.5 million residents and the fourth-largest car market in the world.
Fiat has the largest market share, with nearly 23 per cent, followed by Volkswagen with 22 and General Motors with nearly 20 per cent, according to figures from the ANFAVEA association of vehicle manufacturers.
Factory models will probably include the fuel-efficient, three-cylinder Up!, presented at the Frankfurt Motor Show in September, Valor Economico said.