BMW cash to fuel Mini production

Less than four years after the new Mini was launched, German car maker BMW has announced £100m of new investment.

Some 200 new jobs are to be created at the Oxford factory, including modernised machinery and a new body shell production building. The result of the investment could be to raise output to more than 200,000 cars from 2007. The rise, from 189,000 last year, is a response to rapidly-rising demand and could help wipe out waiting lists. Before Wednesday's announcement, BMW had invested some £280m in Mini production.

Since its launch during summer 2001, the new Mini has gone from strength to strength.

Last year, almost one in six cars sold by the BMW group was a Mini. The company admits that the success of the brand came despite scepticism from many in the industry. "Our decision to produce a new Mini was not received well right away," said Norbert Reithofer, a member of the BMW management board. Initially, BMW said it would produce 100,000 Mini models a year at its vast Cowley factory on the outskirts of Oxford, but the target was quickly reached, then raised, time and time again. Not everyone is convinced that the boom can continue. "The risk is that after they've invested massively in the brand, demand tapers off like it did with the new VW Beetle," said Brad Wernle, from Automotive News Europe.

The price of the car has also gone up. When it was launched, the cheapest Mini cost just more than £10,000. These days, buyers will have to fork out almost £11,500 to own a new Mini One, or even more for the Cooper S which costs up to £17,730. The Mini Convertible, which was launched last spring, costs up to £15,690 for the top model, and there is even a waiting list. Second-hand Minis are not cheap either. A Mini One bought when the model was launched should still fetch at least £8,000 for the cheapest model, while a used Cooper S is likely to be priced from £12,556, according to the-car buying website Parker's. The consumers' association Which operates with slightly different numbers, yet it confirms that the Mini Cooper 1.6 depreciates slower than any other car, other than the Mercedes Benz C180 SE and the BMW 1 Series 116i SE.

The Cowley factory, which initially seemed far too large a production plant for just 100,000 Minis, is increasingly being put to good use.

There are plans to tear down old buildings and build new ones and there are rumours that a new paint shop could be included in the plans. BMW's Mini adventure has made good much of what went wrong during its stewardship of the UK car maker Rover which it sold for £10 five years ago to the Phoenix consortium. In 1999, when BMW still owned Rover, the Oxford factory was producing the award-winning Rover 75. During that year, 3,500 people produced 56,000 cars. Last year, in the same factory, almost four times as many vehicles were produced by just 4,500 Mini-workers. The Mini factory's current output is equally impressive when compared with the main Rover factory in Longbridge, which in 1999 produced 180,000 Rover cars. Last year, MG Rover, which employs more than 6,000 people, produced just 110,000 cars, though it hopes to land a deal with Shanghai Automotive Industry Corporation (SAIC) that could help double the number of cars produced at Longbridge. Indeed, Mini is not only producing more cars than MG Rover does; it remains ahead even when the current sales of Land Rovers and Range Rovers (which are made by the former Rover unit that BMW sold to Ford) are taken into account.
