Volkswagen AG gave its Bentley brand the okay to build a new sport-utility vehicle that could cost $237,000.
The new vehicle will go on sale in 2016, creating over 1,000 new jobs in the U.K. according to VW.
Bentley will spend over 800 pounds, or $1.23 billion, to create the new SUV and other vehicles. The company also plans on upgrading its headquarters in Crewe, England.
The investment is aimed at boosting profitability for Bentley, which accounted for no more than 1 percent of VW's first-quarter earnings of 2.34 billion euros according to Reuters.
"SUVs continue to be in high demand and Porsche has shown that plush sport-utility vehicles have great potential," said Frankfurt-based Equinet AG analyst Tim Schuldt.
VW wants to double Bentley's sales to 15,000 vehicles by 2018. The addition of the new SUV is a big step towards that goal.
The automaker said customers can expect the new vehicle to be the most luxurious and powerful SUV on the market three years from now.
"Bentley fans all around the world are looking forward to the brand's first SUV," VW Chief Executive Officer Martin Winterkorn said in the statement. "Together we will make this new Bentley another true Bentley - powerful, exclusive and successful."
Bentley SUV may face some competition from Lamborghini, which recently won the backing of parent Audi to launch the Urus SUV in 2017, Maserati's Jeep-based Kubang and Land Rover's Range Rover Sport, analysts said according to Reuters.
VW expects demand for the new SUV to come mainly from China Russia where there's a number of wealthy customers and SUVs are most popular.
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