BMW, the German premium cars group, will this month announce a multi-million-pound investment at its Oxford plant to boost output of its Mini range closer to 250,000 and meet soaring demand, senior executives said yesterday.

Helmut Panke, BMW chief executive, said the planned investment would eventually raise capacity by up to 20% at Oxford, which is to remain the sole plant for producing the best-selling Mini.

Last year, when the group sold a record 1.2m cars as a whole, BMW produced 189,000 Minis and sold just under 185,000.

With waiting times of several months in some countries, the aim is to increase output to well above 200,000.

The Oxford site, where old buildings are to be torn down, has substantial vacant land for expansion but executives indicated there were no plans to build new production facilities yet.

Mr Panke said: "We will build and sell more Minis this year than we did in 2004. We will not be limited by Oxford's manufacturing capacity but will make better use of it through investment. We have no secret plans to have another location for Mini production."

His comments came at the launch of the fifth-generation 3-series which BMW hopes will sell more than 2m during its lifetime. The model range accounts for 44% of sales and the new version is claimed to be 13% more fuel-efficient with a 10% increase in performance.

Mr Panke, who is to announce record earnings for 2004 in March, said the group would surpass last year's record sales despite the impact of the falling dollar, which in 2004 knocked 2.4% off global turnover. This rose 6.8% to €44.3bn (£30.7bn).