ANY speculation over the future of the Vauxhall factory in Luton following the company's takeover by French car group PSA has been ended with the announcement that a new Vivaro van will be built there.

The £170 million investment - which includes £9 million from the Government - will see production at the plant expand from 60,000 units a year to 100,000 by the end of next year.

Under the move, which safeguards hundreds of jobs, the Luton factory will be upgraded to accommodate production using the PSA Group's EMP2 platform for light commercial vehicles.

Announcing the decision Carlos Tavares, PSA chairman, said: "This is a major milestone for the future of the Luton plant and a key enabler to serve our ambitions in the commercial vehicle market, guaranteeing customers the best offering in this segment."

With the van market booming PSA reported record sales of 476,500 LCV sales in 2017 - up 15 per cent on the previous year. Adding in passenger car derivatives such as the Peugeot Traveller and the Citroen SpaceTourer and sales in 2017 hit 658,000.

With the new multi-purpose platform for the Vivaro in place at Luton, it will allow the factory to pitch for production of additional models such as the Peugeot Expert and Citroen Dispatch if demand continues.

Business Secretary Greg Clark said: "Today's decision is a vote of confidence in Vauxhall's high skilled workforce and the UK's world leading automotive sector. This investment in upgrading the production platform will safeguard and grow jobs, ensuring the future of the Luton plant well into the next decade and help ensure the plant is well positioned for future Vauxhall models to be made in the UK.

"We have been clear in our commitment to the automotive sector which is why, through the Industrial Strategy, we established a landmark Automotive Sector Deal that will see us working with industry to put the UK at the forefront of new technologies."

Mike Hawes, chief executive of industry body the Society of Motor Vehicle Manufacturers and Traders, welcomed the move, saying: "This announcement is great news for the UK automotive sector and, especially, the Luton plant.

"The UK continues to be a centre of excellence for vehicle production thanks to our engineering expertise, high levels of productivity and a collaborative relationship with government which has enabled us to build a robust industrial strategy and a sector deal."

He said that the UK was currently the fourth largest European car producer with the highest productivity among Europe's automotive producing nations generating £14.6 billion, 8.2 per cent of the UK's total manufacturing output.