The carmaker is to invest €150m to produce the Q3 and A3 sedan from 2015 at the VW plant in São José dos Pinhais, Brazil. In addition, Audi plans to more than double the size of the dealer network by the end of the decade.

CEO Rupert Stadler said: ‘By producing in Brazil, we will create the basis for further growth in the region.’

The move follows the announcement by BMW last October that it is to €200m in a factory in Brazil.

He added: ‘In Brazil, our goal is to lead the premium segment.’

Audi is already starting to make preparations to ensure that production begins smoothly in 2015. Dr Bernd Martens, Audi’s board of management member for procurement, said: ‘For the production of the A3 Sedan, we want to purchase a lot of components locally; we therefore plan to establish close relationships with Brazilian suppliers at an early stage.’

Audi previously built the A3 at the plant from 1999 to 2006 but ended production due to poor sales.

The carmaker is also planning to start production in Mexico from 2016 while in late 2013, the company will open its second plant in China in Foshan.

‘With today’s decision in favour of Brazil, we are ideally positioned in all BRIC countries,’ added Mr Stadler.