Hyundai Motor Co, South Korea's largest auto maker, plans to build a $600-million small-car factory in Brazil, to tap rising demand for small cars in South America.

Hyundai Motor said that the factory will have a production capacity of 100,000 small cars and create around 4,000 jobs. The Brazilian unit will be the auto maker's seventh plant outside South Korea, whose construction is expected to be completed in 2011.

The new plant will help Hyundai compete with Japanese rivals Toyota and Honda in Latin America's largest economy, and also stabilise its global revenues, which suffered due to a slump in North American sales.

In the first phase, Hyundai Motor plans to manufacture an all-new flex-fuel car (which can run on both gasoline and ethanol) in the B-segment, starting from the first half of 2011. According to auto stats in 2007, B-segment vehicle sales, which accounted for 65 per cent of total sales in Brazil has attracted leading auto makers including Hyundai to set up base in the South American country.

In the second phase, Hyundai Motor plans to expand the plant, to increase its line-up and export to neighbouring countries, depending on the demand in Brazil.

Despite the relatively high import tax of 35 per cent, Hyundai Motor has sold 36,006 vehicles in Brazil in the first eight months of this year, nearly triple the amount sold a year earlier. Rise in personal income, has boosted vehicle sales in Brazil by 26 per cent in the first eight months of this year, according to the nation's vehicle manufacturer's association.

With the Brazilian plant, Hyundai Motor's now has factories in the United States, China, India and Turkey and more manufacturing units are under construction, including the $1.7 billion factory  in the Czech Republic. (See: Hyundai Motors to raise $473.2 million domestically for Czech factory)

Hyundai Motor India is the second largest carmaker and the largest passenger car exporter in India. the company has recently decided to introduce a range of smaller cars into the Indian market, in a bid to wrestle its way into the top slot. (See: Hyundai going into battle for the top slot in small cars)

Hyundai has already announced its commitment to make India its sole small car manufacturing hub, and has even relocated its small car research and development (R&D) to its Hyderabad facility. It commissioned its second plant in February 2008, beefing up its operations. The company has invested around $1 billion in its two manufacturing plants in India. (See: Hyundai Motor India commissions its second Indian plant)

Hyundai Motor India has targeted a production to 5.3 lakh units in 2008. The company aims to boost overseas production to two million by 2011.