Chief Executive Olof Persson announced the investment on Thursday during a visit to Brazil and Volvo's press office later confirmed the details of the expansion.

The Volvo group currently has two plants in Brazil producing trucks under the Volvo brand and plans to bring another one of its global brands to the country with the new investment.

Production of heavy trucks in Brazil fell 40 percent through September this year compared with the first nine months of 2011, as struggling local industries and a shift in emissions standards sapped demand for new trucks.

Weak sales and idling assembly lines led Volkswagen AG's local MAN SE unit to put off investments in a new truck factory.