General Motors unveiled plans on Wednesday to spend 2 billion reais ($1.02 billion) in Brazil through 2012 to develop a new family of vehicles for the South American market.

The U.S. automaker plans to invest the bulk of the money at its Gravatai factory in the southern state of Rio Grande do Sul, which it would expand to increase production capacity, Jaime Ardila, GM's chief executive for Brazil and the Mercosur region of South America, said in a statement.

GM made the announcement after Ardila met in Brasilia with President Luiz Inacio Lula da Silva, a former metalworker who cut his political teeth in the late 1970s as a union leader representing auto workers in Sao Paulo's industrial hub.

($1=1.95 reais)

(Reporting by Ana Nicolaci da Costa, Writing by Todd Benson, Editing by Gerald E. McCormick)

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