BMW plans to build the new BMW X1 compact sport utility vehicle at its Leipzig plant in Germany, which now assembles up to 700 cars a day, it said on Friday.
"The exact time point of production start and the market launch of the X1 will be revealed at a later date," the company said in a statement.
With hundreds of millions of euros lost in each of the past few years due to currency headwinds, BMW is under pressure to shift production to the markets where a model makes most of its sales.
The next generation X3 will therefore be built in Spartanburg, along with the larger X5 and X6 SUVs, instead of at Magna's contract carmaking unit, where it is currently still being produced.
BMW said on Friday it also planned investments of more than $155m in the Leipzig plant, where it assembles the 3 Series saloon and the 3-door, cabriolet and coupe versions of the 1 Series compact.
This makes about every eighth BMW brand vehicle a product of the Leipzig plant.
The investment will mainly be used for a brand new stamping line expected to go online at the end of 2009.
It will use about 55 000 tonnes of steel sheet every year to form over 40 different pressed body parts, starting at the end of 2009.
Part of the investment will also be used to expand its body shop