The Italian auto group Fiat said Tuesday it would invest 1.3 billion Euros (1.7 billion dollars) to build a new plant in the state of Pernambuco in northeast Brazil. The investment is part of the company’s 2011-2014 strategic plan that calls for expenditure of a total of 4.4 billion Euros in Brazil, where it says it has been the country’s leading auto maker for the last nine years.

The new plant will turn out around 200,000 vehicles a year and will provide jobs for 3,500 people. Fiat chief executive Sergio Marchionne said by 2014 it wants to be selling more than a million vehicles a year, Brazil being a strategic zone in its expansion plans.

Fiat said the new plant represents a strategic investment for them, the State of Pernambuco and the Northeast Region, as it forms part of a comprehensive program of industrialization and economic and social development for the Region.

The EUR1.3bn will be invested in construction of a manufacturing facility and R&D center, design and development of new products and platforms, in addition to training for employees.

The new plant will be at the center of an industrial zone covering 4.4 million square meters and located in Suape’s Industrial District and will have a production capacity of some 200,000 vehicles per year and will produce new models, developed in Brazil, for the domestic market, as well as other Latin American markets.

The project also includes establishment of a training center to benefit the entire zone, an initiative of the State of Pernambuco.

Marchionne said the plant to be built in the State of Pernambuco represents a very important step for them in strengthening its international presence.

It is also the Group’s objective to contribute further to the economic, technological and industrial development of this country, where we have operated in the automobile sector for nearly 40 years, said Marchionne.

Fiat S.p.A., an acronym for Fabbrica Italiana Automobili Torino, is an Italian automobile manufacturer, engine manufacturer, financial and industrial group based in Turin in the Piedmont region.

Fiat was founded in 1899 by a group of investors including Giovanni Agnelli. Fiat has also manufactured railroad vehicles, tanks and aircraft. As of 2009, Fiat (not including Chrysler) is the world’s ninth largest carmaker as well as Italy’s largest carmaker.

Fiat-based cars are constructed all around the world, with the largest number produced outside Italy being built in Brazil, where they are best-sellers. It also has factories in Argentina and Poland.