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BUDAPEST, Feb 12 AFP

February 13 2013, 00:32AM

German carmaker Opel, part of US car giant General Motors, said on Tuesday it is expanding its Hungarian plant with an engine production facility costing 120 million euros ($A157.58 million).

General Motors has a strategic tie-up with deeply troubled French group PSA Peugeot Citroen.

Opel is regarded as a struggling branch of GM and is in particularly difficult talks over the future of a plant in Germany.

Joachim Koschnicke, Opel's deputy president, told a joint press conference held with Hungary's prime minister Viktor Orban in Budapest that the new production facility at its Szentgotthard plant in western Hungary would be "one of the most modern in the world".

The new facility, expected to begin operating by the middle of next year, will produce a new 1.6-litre direct injection (SIDI) engines.

"It will comprise around 1600 square metres and create over 100 new jobs," Koschnicke said.

Opel's total investment in Hungary now comes to about 1.4 billion euros since the company first came to Szentgotthard in 1990, he added.

In 2012, Opel produced 293,000 engines at Szentgotthard, 30 per cent more than in 2011.

Koschnicke said that the new facility will house 80 new machines able to produce an extra 100,000 units per year.