BMW plans to spend 200 million euros building a factory in southern Brazil that will create 1000 jobs.
The company hopes to start building the plant in April next year and producing cars in late 2014.
The government of Santa Catarina state, where the factory will be located, will have a stake in the project.
BMW vice president Ian Robertson said plans are for capacity of 30,000 vehicles a year, although production will depend on demand.
AAP reports BMW dominates the luxury market in Brazil, where it sells 10,000 - 12,000 vehicles per year. Brazil is the fourth largest car market in the world.