German carmaker Volkswagen will next week announce an investment worth around US$1 billion in Mexico to expand its Puebla plant, a person familiar with the matter said on Thursday.

The investment, aimed at production of the carmaker's Tiguan compact, is due to be unveiled on Monday and is expected to generate about 1,900 jobs, the person said.

Volkswagen spokeswoman Consuelo Minutti declined to comment.

As of December, total investment in the auto sector in Mexico had reached US$19 billion under President Enrique Peña Nieto, who took office two years earlier, the government says.

Volkswagen, which opened its sprawling Puebla plant in 1964, last year produced 475,121 vehicles out of about 3.2 million autos manufactured in the country, data from the Mexican Automotive Industry Association (AMIA) show.

Mexico is the seventh biggest manufacturer of autos and the fourth largest exporter in the world, according to AMIA. More than 80 percent of those vehicles are destined for sale abroad.

Total auto production increased 27 percent last year, compared to 2013, and AMIA has predicted that Mexico will produce more than 5 million vehicles by 2020.