PUEBLA, Mexico — Volkswagen is investing $1 billion in its sprawling manufacturing complex here, underscoring the critical role the German automaker expects its Mexico operations to play in the company's high-profile Strategy 2018 expansion plan.The investment will boost production capacity at Puebla by 25 percent over the next two years, from 450,000 units to more than 550,000. VW also plans to begin building a new small car at Puebla in 2010 to complement the products that will soon be coming out of its plant in Chattanooga, Tennessee.While the Chattanooga plant will focus initially on producing an affordable midsize sedan to compete with the Honda Accord and , the Puebla plant will set its sights on a model known internally as NCS, for New Compact Sedan. Targeted at the Honda Civic and , the NCS is designed to be produced and sold at low cost and eventually will replace the Jetta.Undoubtedly, under NAFTA, the U.S. is the company's major target. But construction of the Chattanooga plant and expansion of the Puebla plant gives VW more flexibility and options in both the 'dollar zone' and the 'peso zone.'The ongoing expansion in North America is part of the broader Strategy 2018 program, under which VW has said it plans to overtake Toyota and General Motors to become the world's largest automaker. In the U.S. market alone, VW wants to double its sales over the next 10 years, from 500,000 to 1 million units.Globally, VW intends to significantly broaden its product portfolio, from 68 to 88 models, while boosting sales in such high-growth markets as Brazil, Russia, India and China.What this means to you: Puebla has come a long way from the days of the Beetle. — Loriana Marietta, Correspondent