Honda Motor (NYSE:HMC) will build a new car factory in Brazil, doubling its car building capacity in that country to 240,000 units a year, Honda announced yesterday.

The new factory will be built in Ityrapina, a city of almost 15,000 population, located approximately 120 miles northwest of Sao Paulo, Brazil's largest city. The existing Honda factory in Brazil is in Sumare, a city of around 100,000, located halfway between Ityrapina and Sao Paulo.

The cost of the new factory, including the purchasing of the 1,433 acres it will be located on, will come to $435 million. It will employ approximately 2,000 people, and produce a compact car such as the Honda Fit.

"Being the fourth largest car market in the world, Brazil is a very important region for the operations of Honda. With the capacity expansion, our goal is to gain competitiveness and offer increasingly attractive products that exceed the expectations of Brazilian consumers," said Honda South America and Honda Cars of Brazil president, Masahiro Takedagawa in the company's statement.

The new Honda plant is planned to begin operations in 2015.