Ultra-luxury brand Bentley wins approval from parent Volkswagen to build what is expected to be the most expensive SUV ever, a product program requiring an £800 million ($1.2 billion) investment at the British auto maker’s U.K. assembly plant.

“The Volkswagen Group believes in the U.K. as a competitive location for industrial production,” says Martin Winterkorn, chairman of the board for Volkswagen Group.

“Bentley fans all around the world are looking forward to the brand’s first SUV. Together we will make this new Bentley another true Bentley – powerful, exclusive and successful,” Winterkorn says in a statement.

Winterkorn was joined by U.K. Prime Minister David Cameron to make the announcement from Bentley’s Crewe assembly plant, located 180 miles (290 km) north of London. The investment at Crewe will occur over three years and create 1,000 local jobs, Bentley estimates.

The U.K. government’s Automotive Industrial Strategy, a £1 billion ($1.5 billion) investment initiative with the country’s auto industry to boost production over the next 10 years, helped make the investment possible.

There was speculation earlier this year that Bentley might choose to save money on production of the SUV by building it outside of the U.K., perhaps in low-cost Eastern Europe.

The first SUV from Bentley will arrive in 2016 and mark the fourth model in production at the 67-year-old Crewe facility. It also will serve as the linchpin to Volkswagen’s plan to grow Bentley’s volume to 15,000 units annually by 2018.

The SUV strategy takes a page from the playbook of Porsche, another VW luxury brand, which used the launch of the Cayenne SUV in 2002 to expand its sales and save the auto maker from an uncertain future.

Bentley global sales so far this year are up 9.0% to 4,279 cars, with much of the activity occurring outside the U.K., leading executives to predict a double-digit increase in deliveries for 2013.

The new SUV is expected to cost upwards of €180,000 ($237,000). It bowed in concept form at last year’s Geneva auto show as the EXP 9 F and did not receive favorable reviews. However, reports out of Crewe suggest the design has changed dramatically, and the auto maker says customer enthusiasm for the SUV is running high.

jamend@wardsauto.com