SAO PAULO — Even though the market is showing only slight signs of improvement, Renault SA says it will build a light commercial vehicle (LCV) plant in Brazil. It will be the company's third new Brazilian plant in a year.

The automaker will invest US$100 million in the new facility, which will be built in Sao Jose dos Pinhais and will employ 400 to 500 people. It is expected to open by the end of next year and will have a 50,000-unit capacity. At startup, it will assemble Master vans at a rate of about 20,000 units each year.

Last year, Renault began Scenic and Clio production at a new plant and recently inaugurated a new engine plant in the Ayrton Senna industrial park, where the LCV plant will be located. All three plants will use the same infrastructure and will benefit from maintenance, administrative and logistics synergies.

Some 60 companies will supply the plant in a just-in-time format. Local content will be 60%.

In addition to its Brazil operations, the automaker currently builds the Kangoo, Clio, Megane, Renault 19 and Trafic in Argentina and the Twingo 2 and Express in Uruguay. It also has a transmission plant in Chile.

Renault wants to make Mercosur a hub for production of passenger cars and LCVs. The company hopes to have 11% or 320,000 sales in Mercosur by 2005.

The plan will be boosted by a pending agreement with General Motors Corp., which sells the Master as the Movano in Europe under a development deal the two automakers signed in 1996. Renault and GM are expected to come to a similar agreement that would have GM selling the Movano in Brazil.