Toyota, the world's second largest carmaker, yesterday boosted the British auto industry by announcing plans to increase capacity at its Derbyshire plant from 220,000 to 285,000 a year.

The Japanese group, which is heading for its eighth successive year of record sales in Europe with 860,000 cars, said it would invest a further £50m at Burnaston, creating 500 jobs.

Last year Toyota, which builds Avensis and Corolla models in Britain, said it would increase capacity at Burnaston to 270,000 units. The extra output will take the workforce to 4,600.

The group, which has overtaken Ford and is closing in on General Motors, sold 834,661 units in Europe last year and plans to sell 1.2m a year by 2010. In the first quarter its market share was 5.3% compared with 4.6% a year ago.

Toyota, which has already invested £1.7bn in Britain, plans to increase capacity at its Valenciennes plant in France, which builds the Yaris, from 184,000 to 210,000, with the prospect of adding a further 30,000.