Media playback is unsupported on your device Media caption Mini workers react to the news of a £500m investment by BMW

BMW has announced a plan to invest £500m in UK car production over the next three years.

The money will help fund the production of the next generation Mini in the UK, safeguarding more than 5,000 jobs.

BMW's investment plan is the second major boost to the UK's motor manufacturing industry this week.

Its announcement came the day after Nissan said it would invest £192m and safeguard 6,000 jobs by building its next generation Qashqai here.

BMW will install new production facilities and equipment at the Mini assembly base in Oxford, a pressings plant in Swindon and its engine plant at Hams Hall, near Birmingham.

The motor industry produces the country's most valuable manufactured exports, with £27bn worth of vehicles and parts going overseas in 2010.

Analysis BMW and Nissan are not the only ones boosting UK production. Jaguar Land Rover plans a new engine factory and more research and development here, and General Motors is mulling whether the UK might be the best place to produce its petrol-electric Opel and Vauxhall Ampera models. The weak pound has made the UK a more attractive place to invest, but carmakers insist they are more impressed by the UK government's support for the manufacturing sector. Both say industrial growth is vital to rebalance the economy and to bolster growth. And they agree that technological innovation is essential to make it happen.

BMW, which has already invested £1bn in the UK since 2000, exports BMW engines as well as Rolls-Royce and Mini cars to the tune of £2.4bn a year and thus accounts for about 1% of all goods exported by UK companies.

The UK automotive sector employs 300,000 people in manufacturing.

Confidence

Prime Minister David Cameron said BMW's investment was an important element in strengthening the country's economy.

"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," he said.

"It's a tremendous vote of confidence in the skills and capabilities of the company's British workforce and in the future of UK manufacturing.

"It's very much part of our ambition as a government to rebalance our economy.

"We've been too reliant on financial services, too reliant on one part of the country. We want to see more manufacturing, and I'm delighted that so many automotive manufacturers are bringing production and supply chain onshore," Mr Cameron said.

Image caption BMW is pouring fresh cash into its Mini factory in the UK

The new Mini coupe is to be launched in 2011 and the Mini Roadster in 2012. Both are to be produced in Oxford, where more than 2 million Minis have been built since 2001 - about 75% of them for export.

BMW said the Hams Hall engine plant set a new annual production record in 2010 with 385,051 engines, about 16% of total UK engine production.

Mini was the third-largest vehicle manufacturer in the UK last year, accounting for 17% of national automotive production.

The Unite union welcomed the investment, which official Simon Powell said had come after uncertainty about the future of the Hams Hall engine plant.

"Winning this investment was not easy," he said. "The UK plants and their workers had to submit to stringent tests to prove their viability, but from shop floor to management we pulled together to secure this investment."

The prime minister is hosting a meeting with the board of directors of the European Automobile Manufacturer's Association (ACEA) at a time of growing confidence in the UK car industry.

The ACEA, whose members include motor industry giants including Daimler, Fiat, Ford and Toyota, is in London for its annual conference.

It is the first time the association has met in the UK, something Business Secretary Vince Cable said showed growing international recognition of the UK's car making industry.