Japanese car giant Nissan praised the workforce at its UK plant after announcing plans to build a new model under a £125 million investment programme, creating 2,000 jobs.
The vehicle will be built at the Sunderland plant from mid-2013 in a project supported by a £9.3 million grant from the Government, and will compete with models in the so-called B segment such as the Ford Fiesta and the VW Polo.
Business Secretary Vince Cable hailed the news as a "clear vote of confidence" in this country's manufacturing industry, while a union leader said the announcement was a "ray of sunshine".
The workforce at Sunderland, where Nissan first started producing cars in 1986, will increase by 400 to a record 6,000, while thousands of jobs will be created among firms supplying the factory.
It is expected that the new model, with a current concept name of Invitation, will have an initial production run of 100,000 a year, helping to cement Sunderland as the largest car plant in the UK - a position it has held for the last 14 years.
In 2011, the plant's 25th anniversary year, Sunderland set a new production record with more than 480,000 models rolling off the lines.
Trevor Mann, Nissan's senior vice president for manufacturing in Europe, said: "This plant has a 20-year heritage in producing successful compact cars stretching back to the first Micra rolling off the line in 1992.
"I'm delighted that Sunderland has secured what will be another very important model for Nissan in Europe. It is a testament to the workforce, the ongoing support from the UK Government and all of our regional partners and suppliers."
Mr Mann, speaking from the Geneva Motor Show, where the new car was officially unveiled, told the Press Association there had been "competitive bidding" from other Nissan plants across the world to build the new car, praising efficiency levels at Sunderland.
"Production rates are very high and the plant has made year-on- year improvements for several years. It is one of Nissan's most productive plants globally."