BMW is expected this month to announce a major expansion of its Oxford Mini plant, involving an investment of about £150m and create hundreds of jobs.

The expansion should increase the capacity of the plant to between 250,000 and 300,000 vehicles a year in order to meet soaring demand. Mini production last year reached nearly 190,000 after the introduction of a convertible version in the summer. But spare capacity at the factory has run out.

BMW said yesterday that Oxford would remain the sole plant for Mini production. Details of the expansion will be unveiled in a fortnight by BMW's board director for production, Dr Norbert Reithofer, at a special event at the Oxford plant and will raise the German car maker's investment in the site to more than £400m.

The Oxford plant has 4,500 employees and operates 11 shifts a week. An expansion in production capacity to as many as 300,000 vehicles a year could create more than 1,000 jobs.

BMW has spent £280m on the Mini plant since it sold the remainder of the Rover car company to the Phoenix consortium in May 2000.