German auto-giant BMW is planning to modernise Rolls-Royce cars after it takes over production of the British brand in 2003, the Frankfurter Allgemeine Zeitung said.

"The Rolls-Royce brand and the car is the completion of BMW's portfolio," said chief executive Joachim Milberg in an interview, adding that BMW plans to modernise the design of the classic British marque and sell it to customers who want "absolute luxury".

BMW has threatened to move production of Rolls-Royce to either the U.S. or Germany if it does not get planning permission for a new 'green field' factory near Chichester in southern England.

The plant, which would build around 1,000 cars a year, has met with local opposition due to concerns about possible damage to the environment, the newspaper said.