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* Engine factory to open in late 2015, follows new car plant
* Toyota doubling auto production in Brazil
* New factories based in Toyota's Sao Paulo industrial hub
BRASILIA, Aug 8 (Reuters) - Japanese automaker Toyota said on Wednesday it will invest about 1 billion reais ($494 million) to build a new Brazilian engine factory supplying local car plants, bringing more of its supply chain to Brazil under government pressure.
"With the local production of this engine, the national content of the Etios and Corolla will jump from 65 percent to 85 percent," Chief Executive Akio Toyoda told reporters during a visit to the Brazilian capital.
"This is a sign of gratitude and greater cooperation with Brazilian society," he added.
The investment comes as Brazil's President Dilma Rousseff shapes a new set of rules for the local auto industry, after imposing a steep tax increase on vehicles with significant foreign content to protect local jobs.
Toyota executives were in Brazil for the inauguration of a new factory making Etios compact cars, built with an investment of $600 million. That plant is set to produce 70,000 vehicles per year, employing some 1,700 workers.
The Etios factory, along with the new engine plant slated to open in the second half of 2015 and the factory currently making the larger Corolla, are clustered in an industrial corridor in Sao Paulo state.
Toyoda said initial estimates for the new engine plant suggested it would employ around 600 to 700 workers at first and the workforce would grow as needed.