BASF has spent €2.5 million on expanding capacity for waterborne automotive coatings at its Demarchi site in Brazil's Sao Paolo state.

The German group, which did not provide capacity details, said the expansion is in response to demand from new car manufacturers setting up production facilities in Brazil and the ongoing trend to replace solvent-borne with waterborne technology.

Along with traditional international automotive industry customers such as GM of the U.S., Germany's Volkswagen, Italy's Fiat and France's PSA in addition to its "strong presence" in the trucks sector, BASF said it has in recent years gained new supply contracts for companies such as Korea's Hyundai and China's Chery.

Along with the site in Brazil- the world's fourth largest car sales market and seventh largest car manufacturing market - BASF produces automotive coatings for the South American market in the Argentinian capital of Buenos Aires.