ohannesburg - German automotive giant BMW on Monday announced it was investing 2.2 billion rand (around 220 million dollars) to build its new 3 Series in South Africa, after obtaining assurances from the South African government on continued manufacturing incentives.

Announcing the investment in Johannesburg, BMW South Africa's Managing Director Bodo Donauer said: "It will secure BMW car production in South Africa for the foreseeable future."

From 60,000 vehicles a year, BMW South Africa's production will jump to 87,000 vehicles.

"This is a very, very significant statement," Trade and Industry Minister Rob Davies said. "This is a major ... statement of confidence in the South African economy, especially a a time when the global automotive industry is under extreme strain," he added.

From its plant outside Pretoria BMW SA exports to the United States, Japan, Australia and other leading car markets as well as sub-Saharan Africa. The company's South African plant was its first outside Germany and dates to 1974.

South Africa's development of a new automotive incentive programme was key to BMW's choice of the country for the investment, according to Donauer.

The yet-to-be-finalized Automotive Production and Development Programme (APDP) continues a long-running programme of incentives encouraging BMW and other carmakers to manufacture in South Africa.

The new plan allows companies that produce more than 50,000 cars a year to import 20 per cent of all their components duty-free, among other measures.

South Africa is a niche player in the global automotive industry, producing around half a million new cars for the local and export markets. BMW SA employs 2,150 people. (dpa)