Nissan, the Japanese carmaker, is to invest a further pounds 250m at its plant in Sunderland in preparation for production of a new model next year.
The company, which plans to recruit 300 staff by Christmas, is also moving engine assembly work to the UK, making the site one of the most integrated car plants in Europe.
Nissan's investment, bringing the total spent on the site to pounds 1.25bn, is for the new Primera mid-range saloon, due in the showrooms by summer 1996.
The increased investment in the UK will help Nissan overcome some of the problems caused by the high yen, though the production plans come at a time when the European car market is weak.
But Ian Gibson, chief executive of Nissan UK, said: "By making the investment in the low part of the cycle we will have the product when the car market returns."
This year, Nissan UK will build about 90,000 Primeras. "We would like to see that get over 100,000 again in the first full year of production in 1997," Mr Gibson said.
After its launch in 1991, the first Primera began by selling well over 100,000 a year before the market dipped in 1992/93. Total car output from Sunderland this year is expected to be around 210,000, against a capacity for about 300,000.
Nissan will build a new plant for robot welding of rear axles and assembly of diesel engines, which will be fitted to around one in four of the new Primera models.
Spending on components from European suppliers is being maintained at around pounds 400m a year, with the German supplier, Bosch, getting the lion's share of the new engine supply contracts.
Only the engine block and transmission will be imported from Japan.
Mr Gibson said: "We will have everything from an aluminium foundry to a test site on the plant. We are the most totally integrated car plant in Europe." Design and development on the new Primera is being completed at technical centres in Britain and Belgium. By the time the saloon is launched at next year's Paris motor show, Mr Gibson hopes to have completed a cost and market study to decide whether to go ahead with building a Primera estate version.
The new car will be the fourth model produced at Sunderland. It will be launched some 10 years after the plant built its first car.
Nissan UK employs 5,500 people in the UK, 4,000 at the Sunderland plant.
Mr Gibson said priority in hiring new staff would be given to some of the 300 ex-workers laid off over the past two years because of a slump in international sales.
Tim Eggar, industry minister, welcomed yesterday's announcement, which he described as a "vote of confidence" in the UK as the place to do business.
Nissan's news follows an announcement by rivals Toyota earlier this year of expansion plans at its plant in Derbyshire.Reuse content