Nissan's factory in Sunderland has begun production of a new two-litre petrol engine under a £15 million investment plan set out for the next few years.
The latest move is expected to create up to 200 new jobs at the plant by 2013, while safeguarding 130 existing positions.
The car giant said on Wednesday that it expects to manufacture around 60,000 of the engines every year, based on market demand.
Kevin Fitzpatrick, Nissan's UK vice president of manufacturing, said: "Today marks an important new stage in engine production in Sunderland.
"In recent years our employees have focused on improving the overall competitiveness of our engine operation so we are able to bring new business like this to the plant."
Margaret Fay, chairman of One North East, which gave Nissan a grant of almost £2 million, said: "This fresh investment from Nissan is a real boost both for the staff at its Sunderland plant and for the wider automotive industry in our region."
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