BMW is spending more than £100 million on expanding capacity at its factory at Oxford where it makes the hugely successful new generation Mini.
The group, which has pumped some £700 million into Britain since it abandoned its ill-fated marriage with Rover in 2000, said the cash will spent on a second body shell production building and on upgrading the plant's paint shop.
The investment will help raise production volumes to more than 200,000 a year - double the projected output when the Mini was launched in late 2001 - and create about 200 new jobs.
The new 161,000 sq ft body-in-white building will increase production capacity by about one third and the modernised paint shop will get a second line to cope with high demand for the top of the range Mini Cooper and Cooper S models, which have contrasting black or white roof colours.
As he laid the foundation stone of the new building yesterday, BMW group production director Norbert Reithofer said: "These measures will allow us to react even more flexibly to the high demand for Mini throughout the world.
"At the same time, we are increasing our flexibility as regards the production of the various Mini model variants."
From 2007, more than 80 people and 160 computercontrolled welding robots will be assembly Mini body shells from panels pressed at BMW's pressing plant at Swindon, where a £140 million investment was announced last year.
Also from 2007, Mini engines, which are currently imported from Germany, will be built at BMW ' s £400 million high tech engine plant at Hams Hall, near Birmingham.
BMW Oxford occupies roughly half of the old Morris/Rover factory at Cowley on the Oxford Ring Road and currently employs 4,500 people, including more than 100 apprentices.
Between them they keep the factory operating for 134 hours a week on a three-shift pattern and their ideas have resulted in cost savings of more than £17 million since 2002.
Between 2000 and 2004 BMW pumped £280 million in the plant which repaid the investment by producing the 500,000th Mini two years ahead of schedule last August.
The car is sold in more than 70 different countries from Chile to China and worldwide sales had reached nearly 530,000 by the end of last year.
More than 70 per cent of Minis are exported, but the UK remains the car's biggest market followed by the US and Germany.
Work and Pensions Secretary, Oxford East Labour MP, Andrew Smith said yesterday: "This is a great manufacturing success story born of Anglo-German co-operation and the further expansion we are marking means an enormous amount to our city and country.
"It means jobs, opportunities and a boost to local prosperity."