PRAGUE, July 17 (Reuters) - Hyundai Motor Co (005380.KS), South Korea's top automaker, will invest 130 million euros ($183.4 million) in its Czech unit over the next two years, a spokesman said on Friday.

Auto production, backbone of the small and open Czech economy's exports, has been hammered by a slump in demand but the appetite for small, cheaper cars such as those produced by Hyundai has grown.

The investment will also help soften the sharp drop in foreign direct investment to the Czech Republic this year which reached 36 billion crowns ($1.96 billion) in the first quarter, compared with 182.8 billion for the whole of 2008.

The investment is to raise Hyundai's gear unit production in the central European country to 500,000 units from 300,000 by the turn of 2011 and 2012, spokesman Petr Vanek told Reuters.

The car maker will also switch to a three shift operation from current one shift and raise the number of workers to 3,400 from 2,000.

(Reporting by Robert Mueller; Editing by David Cowell)