BMW to invest £500 million in UK on new Mini

LONDON (Reuters) - Germany’s BMW said it will invest 500 million pounds in Britain over the next three years, mostly on facilities to build next-generation Minis, but stopped short of promising new jobs or increased production.

The British government is pinning its hopes on manufacturing and exports to help recover from the banking crisis but announcements by carmakers this week have so far been more about maintaining the status quo than ramping up output or new plants.

This week’s announcements build on coups secured by Margaret Thatcher’s Conservative administration in the 1980s when it attracted big Japanese carmakers to open plants in the UK and take up slack left by a declining indigenous car making industry.

“This is a reinforcement of an investment but in industry terms 500 million pounds is not a lot of money,” said Peter Wells, a director of Cardiff University’s centre for automotive industry research.

“For Britain this isn’t a major coup but is more like business as usual though it’s good to see BMW is maintaining its interest in the UK and in the Mini.”

BWM’s announcement Thursday forms part of its plans to update its plant in Oxford ahead of the introduction of the next generation of Minis, while Nissan announced Wednesday that it would invest 192 million pounds in Britain on the next version of its Qashqai model.

“We have started preparing our UK plants for production of the next generation Mini and this investment underlines that the UK will remain the heart of Mini production,” the Munich-based company said Thursday.

This latest tranche takes BMW’s investment in its UK operations to 1.5 billion pounds since 2000 and is expected to safeguard 5,000 jobs.

British Prime Minister David Cameron welcomed the announcement which some viewed as a public relations exercise by a government desperate for good news on job creation.

Unemployment in the UK fell by 36,000 to 2.46 million in the three months to March, the lowest level since last September.

“We live in pretty uncertain times and I think governments are looking for any small slice of positive news they can get, particularly when job creation is number one on the public’s agenda,” said one autos analyst who asked not to be named.

New car registrations in Britain in the first five months of 2011 were down 7.3 percent on the prior year, the SMMT said on Monday.

Car sales also tumbled across Europe in May with the end of government incentives, ending manufacturers’ hopes the industry would swiftly return to the heady days of a decade ago.

Europe’s auto industry has excess manufacturing capacity but has been helped by demand for European cars in emerging markets like China, Brazil, and India.

Business secretary Vince Cable will visit Detroit next week to press Ford and General Motors to invest more in Britain.

Although the car industry in Britain is now largely foreign owned, it still employs more than 700,000 and accounts for more than 10 percent of exports — an annual value of around 25 billion pounds.