Germany's Volkswagen AG (VOWG.DE), Europe's biggest automaker, plans to produce 1 million vehicles in Brazil by 2012, 39 percent more than in 2008, Valor Economico newspaper said on Thursday, citing a senior company executive.

To achieve that target, Wolfsburg-based VW wants suppliers in Brazil to increase installed capacity and production, Valor said, citing comments by Alexander Seitz, Volkswagen's vice president of procurement in the country.

The company expects purchases of auto parts, components and other materials to jump 11 percent this year to 11 billion reais, while automobile production is expected to grow by 21 percent from 2008 to about 800,000 units, Seitz told Valor.

Seitz is concerned about Brazilian auto parts makers' long work hours and limited flexibility to meet extra orders, Valor said, which justify the VW's new-found approach to suppliers.

Volkswagen sold 66,849 vehicles in June in Brazil, up 20 percent from May. (Reporting by Guillermo Parra-Bernal, editing by Gerald E. McCormick)

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