Booming Mini demand to be fed by extra production in Germany

As Cowley exhausts its capacity, BMW's Bavaria plant will benefit from surging market for small cars

The new generation of Minis will be built in a German factory as well as at Cowley – another blow to the British car industry.

Cowley, the Oxford plant that is one of the UK's biggest remaining car factories, cannot meet demand for all the new vehicles, including the new Coupe and the Roadster. It builds around 200,000 cars annually but the launch of the new Minis means the plant will soon exhaust capacity and a new production line will be needed.

Mini's owner, BMW, is thought to be looking at production at its state-of-the-art Regensburg plant where three million BMWs have now been assembled by its 10,000 workers. It is likely to add capacity there rather than in Oxford because of currency exchange rates and other costs that will make it more competitive.

Frank-Peter Arndt, BMW's head of car production, said: "In the longer term, given the strong growth of the Mini brand, we will have to think about a further production site. We could imagine a German factory for the production of Mini-based models."

BMW sacked 850 temporary workers at Cowley in February, causing outrage within the unions. Most of those sacked have subsequently been re-employed.

BMW's transformation of the British small car is bringing worldwide success in difficult markets. Though sales fell by 16 per cent in the first half of 2009, there are signs of a recovery. In the key US market, where dealerships are being expanded, sales of the Mini rose by 10 per cent in September.

Ian Robertson, a BMW director, said: "Since the re-launch, we have sold around 1.5 million Minis. After record sales in 2008, Mini sales in 2009 are almost at the same level as last year. Recent months have seen positive developments in key markets such as Germany, the UK and Italy."

With the new Coupe and Roadster, there will be seven variants of the car first launched by Sir Alec Issigonis 50 years ago. Mr Robertson said: "The construction of our Coupe and Roadster is based on a lightweight concept. Both have a lowered centre of gravity. This means greater efficiency, minimum fuel consumption and CO2 emissions."

PricewaterhouseCoopers reckons the small-car market is set to grow by 30 per cent by 2015 because of the economic crisis and environmental awareness. Wide margins for premium small cars are attracting upmarket manufacturers such as Audi, which is bringing out the A1 next year. It will represent 10 per cent of overall production.

BMW plans to bring out an electric car by 2015.