* To invest 250 million euros in Kaluga engine plant

* Up-to-date engines will be produced there starting 2015

MOSCOW/FRANKFURT Aug 28 (Reuters) - Germany's Volkswagen said on Wednesday it is aiming to invest a total of one billion euros ($1.25 billion) in Russia by 2018, initially expanding by building an engine plant in Kaluga.

The company said that Russia is its primary strategic growth market in Europe and by 2018 it aims to sell half a million vehicles in the country annually.

Russia's car sales are expected to rise 6 percent in 2012 year-on-year, a deputy trade minister said earlier this year. Car sales totaled 2.65 million units in 2011, up from a forecast of 2.6 million.

Volkswagen will invest 250 million euros in the construction of the plant in Kaluga, a town some 190 km (118 miles) south-east of Moscow. The plant will produce one of the most up-to-date engines, it said, starting from 2015.

The company has already invested 1 billion euros so far in Russia, meaning by 2018 it will have invested 2 billion euros, it said on Tuesday.

Russia was on course to become Europe's biggest car market before the financial crisis, but a collapse in demand as credit dried up caused sales to halve in 2009. 

See Now: OnePlus 6: How Different Will It Be From OnePlus 5?