Germany’s BMW has announced plans to spend the equivalent of 560 million euros in the UK mostly on building next-generation Minis.
Over the next three years it will set up new production facilities and equipment at the Mini plant in Oxford, just west of London.
The British government welcomed the announcement which will help safeguard 5,000 jobs.
It came one day after Japanese group Nissan said it would invest 216 million euros in Britain on the next version of its Qashqai model.
Prime Minister David Cameron said: “The production and export of iconic British cars like the Mini is making a real contribution to the rebalancing of the economy that this government is determined to achieve.”
The British government is trying to increase manufacturing as the country struggles to recover from the financial crisis and the recession that followed.
Manufacturing makes up 13 percent of the UK economy.
Although the car industry in Britain is now largely foreign owned, it still employs more than 700,000 people and accounts for over 10 percent of exports — an annual value of the equivalent of around 28 billion euros.