BMW has been granted local authority approval to build a new £60 million home for Rolls-Royce close to the old Goodwood motor racing circuit in West Sussex.

The scheme for a head office and assembly plant needs to be rubber stamped by the Department for the Environment, Transport and the Regions, but the German car manufacturer is confident the first examples of a new generation Rolls-Royce model will go on sale early in 2003.

The former Rover owner has been working on an all-new Rolls-Royce saloon since Volkswagen agreed to split the Rolls-Royce and Bentley brands two months after acquiring both from Vickers for £497 million in 1998. Name, badge, grille and Spirit of Ecstasy emblem for use from January 1, 2003, are understood to have cost BMW £40 million.

Goodwood was acquired from Festival of Speed organiser the Earl of March, and had been on a shortlist of four - the others being Cowley, Derby and an M40 greenfield site west of London. BMW's new plant will have an annual capacity of 1,000 cars and will employ 350 people. Rolls-Royce output at Crewe, under Volkswagen ownership, was 442 units in 1999 and 497 last year.

This week's decision by Chichester District Council to approve the factory plans was welcomed by Project Rolls-Royce as “a very important step towards achieving BMW Group's goal”. A spokesman added: “Throughout the past year the project team has consulted widely, including the views of neighbouring communities. This programme of discussion will continue as the project develops.”

An “all going to plan” message was issued at the Detroit Motor Show in January this year by Karl-Heinz Kalbfell, the BMW Group marketing vice-president responsible for Project Rolls-Royce. “We are likely to be operating to a very tight schedule if we are to produce our first car ready for delivery to the customer by January 1, 2003, but this will be done - and to the level of perfection that the customer has every right to expect,” he said.

DETR go-ahead is expected within weeks of the General Election on June 7.