More MINI production is to be shifted out of the UK but owner BMW said Oxford would always be the home of the famous small car.

The problem is that as the family grows it is running out of space at home.

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Plant Oxford, as BMW calls it, on what remains of the the former Morris/British Leyland/Rover Group Cowley site, is close to full capacity and there is no more room to expand, said Harald Kruger, the BMW executive in charge of both MINI and Rolls-Royce.

Production of some models will be moved later this year to contract assembler Nedcar in Holland, which has plenty of spare capacity.

Kruger said: “We have not decided yet which models we will produce in Holland but we definitely need the additional production capacity.”

The Dutch plant, originally built by DAF, has produced Volvo and Mitsubishi cars in the past but faced an uncertain future after the Japanese company’s recent decision to pull out – selling the plant for EUR1 – but now BMW has stepped in.

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MINI already has other contract production outside the UK at Magna Steyr in Austria which builds the Countryman and new Paceman.

Kruger said the brand will continue to use contract assemblers to make up production volume.

“It gives us the necessary flexibility to increase or decrease production and move model lines around if necessary,” he added. “It also makes more sense than investing in new facilities around the world.

“Production capacity is something we have to monitor all the time because of the success of cars globally but Oxford will always be the home of MINI.”

Kruger added the US is now MINI’s largest market. It sold 66,000 models there last year. The UK is second at 51,000 followed by Germany at 37,000. Coming up fast on the rails, however, is China with 23,000 sales in 2012.