Mexico City, Jan 28 (IANS/EFE): German automaker Volkswagen said it will begin manufacturing its redesigned Golf model in Mexico in the first quarter of 2014.

"With its existing infrastructure, competitive cost structures and free trade agreements, Mexico is the ideal location to produce the Golf" for markets in North and South America, Hubert Waltl, a member of the board of management of the Volkswagen passenger cars brand, was quoted as saying in a statement.

"The decision to produce the Golf in Mexico builds on Volkswagen's strategy for the North American market", where it plans to invest more than $5 billion over the next three years, the statement said.

"Localization has become increasingly important in automotive manufacturing" as a safeguard against currency fluctuations and a means of being closer to the market where the vehicles will ultimately be sold, it added.

Volkswagen said it plans to invest around $700 million to adapt the production lines at its plant in the central Mexican city of Puebla to manufacture the all-new VW Golf hatchback.

Earlier this month, the Wolfsburg, Germany-based automaker inaugurated a $550 million engine plant in the central Mexico state of Guanajuato.

Last September, it also announced plans to invest $1.3 billion to build a new Audi plant in Puebla.

Volkswagen produced a record 600,000 vehicles in Mexico last year, 88 percent of which were destined for export around the world.

The German automaker - whose Mexican subsidiary, Volkswagen de Mexico, was founded in 1964 - owns the Audi, Bentley, Lamborghini, Seat, Skoda and Porsche brands, among others.