HYUNDAI Motor Co, South Korea's biggest auto maker, plans to build a US$600-million small-car factory in Brazil, to tap rising vehicle demand in Latin America's market.

The factory, Hyundai's seventh plant outside South Korea, will have a production capacity of 100,000 small cars a year starting from the first half of 2011, the Seoul-based car giant said in a statement released to Bloomberg News.

Vehicle sales in Brazil grew 26 percent in the first eight months of this year, spurred by rising personal income, according to the nation's vehicle manufacturer's association. The new plant will help Hyundai compete with Japanese rivals Toyota and Honda in Latin America's largest economy, and shore up revenue as North American sales fall.

'This Brazilian factory will raise sales in the emerging markets, helping Hyundai weather slowing demand in major auto markets like the United States and Europe,' Sohn Myung Woo, a Seoul-based analyst at KB Investment & Securities Co, said.

The new factory will be in Piracicaba city, 157 kilometers northwest of Sao Paulo, and create about 4,000 new jobs. Hyundai plans to expand the plant to build new vehicle models and exports for neighboring countries.

Company Chairman Chung Mong-Koo has been aggressive in boosting capacity outside Korea to meet local demand and help reduce the negative effects of currency fluctuation on exports.

Hyundai operates factories in China, India, Turkey and the US, and will open a 300,000-unit-a-year plant in the Czech Republic by the end of the year. A factory in Russia is also under construction.