Nissan, the Japanese auto major, is set to invest £125 million in its Sunderland factory which is expected to create 2,000 jobs in the UK auto sector.
The investment is to produce Nissan's compact concept car the Invitation and the production would be beginning in the middle of 2013.
The UK government is supporting the project with a £9.3 million grant from the government's Regional Growth Fund.
The initial rollout from the factory would be 100,000 cars a year.
"The car will be one of the best-equipped in its class, with advanced safety technology that interacts with the driving environment and tells the driver what is happening around it," Sky News reported Nissan as saying.
With the addition of 2,000 new jobs, the Sunderland factory work force would be reaching a 6,000-mark.
The company would be making the announcement at the Geneva motor show.
The move is hailed as a positive development by Business Secretary Vince Cable.
"It is very positive, but you can't see this in isolation, because the other big car companies have also make major commitments to the UK," the BBC quoted Vince Cable as saying.
"Jaguar Land Rover, Ford, BMW Mini, are all putting in more money and bringing back the supply chain," he added.