The investment will be used to increase production of the Mini at factories in Birmingham, Oxford and Swindon and will safeguard thousands of jobs.
Prime Minister David Cameron said:
I am delighted that BMW has chosen to make such a significant investment in the UK. This demonstrates confidence in British manufacturing, provides a fantastic boost for the workforce, and shows we are making real progress in rebalancing the economy.
Today’s announcement follows last year’s £500 million investment in UK production.