Mini's runaway success may see engine production switch to UK

BMW is planning to switch production of the engine for the Mini to the UK following the runaway success of the car and the level of demand in its home market.

The switch is expected to take place when the new Mini is introduced around 2006 although BMW will need to announce the location of engine production by the end of next year.

Switching engine production would be a major coup for BMW's new Hams Hall engine plant in the West Midlands, which currently makes four-cylinder engines for the BMW 3 series. It will also build four-cylinder engines for the new BMW 1 series which is due to appear in the next two to three years. BMW currently sources its 1.6 litre Mini engines from a joint-venture company in Brazil, which was set up in partnership with DaimlerChrysler.

Hams Hall went into production last year and will make about 150,000 engines this year. However, it has a capacity of 250,000 engines.

A BMW spokesman refused to comment on where the new Mini engine would come from. "No decision has been taken so far," he said. However, he pointed out that Helmut Panke, BMW's new chairman, had set the group a target of raising car sales from 1 million-plus this year to 1.4 million in 2008. "There is additional capacity in Hams Hall and growth in BMW group output will lead to additional production in Hams Hall," the spokesman said.

BMW expects to sell 150,000 Minis worldwide this year. It began 2002 expecting to sell 25,000 in the UK but now forecasts the total will reach 35,000. The German company is said to be making "millions of pounds" in profits from its Mini sales in the UK. Sixty per cent of all Minis sold here are the Cooper or Cooper S versions and the average buyer specifies an extra £2,000 of equipment on top of the base price of £10,300 for the Mini One to £14,500 for the Cooper S.