SEOUL -- General Motors Corp.'s South Korean venture announced a 1.74-trillion-won ($1.49-billion U.S.) investment plan, in a move intended to strengthen and diversify its growth in the global market.

The investment plan also will help the world's largest auto maker bolster the brand image of its South Korean venture, which was established amid one of that country's fiercest labour protests.

GM Daewoo Auto & Technology Co., South Korea's third-largest auto maker, said it would invest $573-million to develop its first sport-utility vehicle. The move is expected to put GM Daewoo on a collision course with Kia Motors Corp. and Hyundai Motor Co., which have reaped strong profits exporting their SUVs. GM Daewoo said it plans to begin selling its SUVs in 2006 in South Korea and elsewhere.

"Our new SUV will fill a major gap in GM Daewoo's model lineup," said Nick Reilly, president and chief executive officer of GM Daewoo. "It will enable us to compete in one of the fastest-growing segments in the Korean and global marketplace."

Mr. Reilly, former chairman of GM's British subsidiary, Vauxhall, was appointed to head GM Daewoo two years ago with the task of stabilizing operations and restoring confidence in the GM Daewoo brand. GM's takeover bid of Daewoo Motor was plagued by labour turbulence, with union members throwing Molotov cocktails at GM offices in Seoul.

GM, along with undisclosed partners, owns 70 per cent of GM Daewoo. In 2002, GM and its partners purchased key assets of Daewoo Motor Co. from its South Korean creditors for $400-million.

For GM, Daewoo's assets were considered an ideal platform for exporting to other parts of the Asian-Pacific region, Europe and North America. GM Daewoo said yesterday that it sold about 600,000 vehicles during 2003, of which about 450,000 vehicles were sold outside South Korea.

In addition to announcing a new SUV model, GM Daewoo said yesterday that it is investing $207-million to build a diesel engine plant in Gunsan, south of Seoul, with an annual production capacity of 250,000 units. At the same time, GM Daewoo said it has signed a licensing agreement with Italian diesel engine maker VM Motori SpA to develop and produce a series of 1.5- and 2.0-litre diesel engines compliant with new European regulations.

Separately, GM Daewoo said it would spend additional capital to introduce a large-size sedan model in South Korea, expand production and acquire an automatic transmission plant.