BMW invests £100m as Mini races ahead

Further proof of the commercial success of the new Mini came yesterday as its owner BMW announced an investment of £100m at its Oxford plant to cope with the huge demand for the small car between now and 2007.

Further proof of the commercial success of the new Mini came yesterday as its owner BMW announced an investment of £100m at its Oxford plant to cope with the huge demand for the small car between now and 2007.

A new body shell production building and modernisation of the paint shop will be the main focus of the investment as annual production looks set to exceed 200,000, far in excess of expectations when the model was launched in 2001. Last year 189,492 Minis were built.

About 200 new jobs are likely to be created, adding to the current workforce of 4,500. "These measures will allow us to react even more flexibly to the high demand for the Mini throughout the world," Norbert Reithofer, the BMW board member responsible for production, said. The company said it has invested £280m at Cowley in the past four years.

For BMW it represents quite a turnaround from 2000 when the company withdrew from its disastrous liaison with Rover Group, or "the English patient" as it was inevitably dubbed. Having virtually given Rover away (for £10) to its management and sold Land Rover to Ford, BMW retained the Oxford Mini factory and the Hams Hall engine plant in Birmingham, where four-cylinder engines are now made for BMW-badged cars.

The company has indicated that production of Mini petrol engines, currently sourced in Brazil in a joint venture with DaimlerChrysler, may be repatriated to the UK, again the product of an industry joint venture, on this occasion with Peugeot. When the Mark 3 Mini comes on stream in about 2008, it may well form a complete range of cars, comprising three- and five-door hatchbacks, an estate and, possibly, a small SUV. There are no guarantees but it seems it will be made in the UK. "We will invest here in Oxford and do not have plans to invest elsewhere," said Mr Reithofer. "Let's see what happens in three years."

The Mini generates high profit margins for BMW. Rarely bought in standard "Mini One" form for just over £10,000, owners have shown a preference for the more expensive Cooper, Cooper S, Works and convertible versions. With a dizzying array of costly options, Minis are often in effect custom built for their drivers, and the most expensive have been known to cost more than £30,000.

BMW also benefits from the way the Mini brings a younger buyer to its products and thus a wider customer base as they progress to the more mainstream BMW-badged cars. The average age of a mini buyer is 29 - 10 years younger than their BMW-purchasing counterpart. BMW has also been careful to protect the brand's "Britishness" and has used clever marketing to recall the original 1959 model's cheeky, classless appeal.