BMW-badged cars could join BMW-designed engines on British assembly lines if proposals currently being considered are given the green light in Munich.

The Mail on Sunday newspaper reported that the Munich-based car maker is considering building a new small car and versions of its top-selling 3-series model at its Cowley plant in Oxford, where it is currently ramping up production of the new Mini from 100 to 500 units a day.

Last February, BMW opened an engine plant at Hams Hall in the English Midlands and it is also building its new Rolls-Royce factory on the south coast.

The Mail on Sunday said that German executives have privately told Cowley union officials that developing the site would free up much-needed capacity in other plants worldwide.

The newspaper added that BMW is concerned about exchange rate problems caused by the strength of Britain’s pound sterling, but, citing company insiders, added that the company believes the extra investment would pay off.

Cowley will eventually make about 70,000 Minis a year but could produce 100,000 vehicles annually, the Mail on Sunday said, adding that, with extra investment, that output could rise substantially.

The newspaper said that BMW’s ambitious plans to broaden its product range, including the introduction of a 1-series entry-level car, could see all of the company’s small-car production under one roof in Oxford.

Citing government sources, the Mail on Sunday said that production at Cowley could be boosted to 250,000 cars a year if BMW invested in the plant's paint shop.

Officially, the newspaper added, BMW claims to want to concentrate only on building the Mini at Cowley. But the Mail on Sunday’s sources say that investing a further £250 million would allow BMW to install another production line on the site.

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