Bentley to build all of VW's W12 engines in Britain

(Adds details, quotes, figures)

By Costas Pitas

LONDON, March 19 (Reuters) - Britain-based luxury carmaker Bentley Motors will make all of parent Volkswagen (Other OTC: VLKAF - news) 's powerful W12 engines from the end of this year, creating about 100 jobs for its central England factory and ending production of the engines in Germany.

The announcement came on Wednesday after Bentley posted a record 2013 profit, driven by demand from the Americas, and as British finance minister George Osborne trumpeted the country's economic recovery in his annual budget.

Bentley, which was bought by Volkswagen (Berlin: VOW.BE - news) (VW) in 1998 and is known for its sleek models with a racing pedigree, said it expected to be producing 9,000 W12 engines by 2017/18. Currently, it makes around 5,000 a year at its factory in Crewe, with a remaining few thousand made in Salzgitter (Other OTC: SZGPY - news) , Germany.

The move will lead to Bentley exporting engines to cars made outside of Britain for the first time, with some to be used in as-yet unspecified models for VW and its high-end Audi (Other OTC: AUDVF - news) brand.

Bentley Chairman and Chief Executive Wolfgang Schreiber said it made sense to manufacture all W12 engines in one place and played down the significance for German carmaking, given VW's target to sell a total of 10 million cars overall.

"It is not a disaster for Germany," he told reporters in London. "The W12 volume in total compared to that volume that they normally produce in the engine manufacturing plants is relatively low."

Bentley, which sells some of its cars for more than 200,000 pounds ($331,500) each and is working on what is billed as the world's most expensive sport utility vehicle (SUV), posted a 67 percent jump in 2013 operating profit to 139.7 million pounds.

The brand previously said turnover climbed 15.5 percent to a record 1.4 billion pounds, boosted by a new generation of the Flying Spur saloon, rolled out last year, and a convertible version of the Continental GT Speed coupe, introduced late 2012.

Demand from the Americas outweighed shrinking deliveries in China, where luxury brands have been suffering from slowing economic growth and a clampdown on conspicuous consumption.

Bentley sold 10,120 ultra-luxury saloons, coupes and convertibles cars last year, 19 percent more than in 2012 and beating a previous high set in 2007.

Sales were up 13 percent to 1,408 cars in the first two months of 2014, and the brand said it hoped to enter new markets including Morocco, Iraq, Vietnam and Chile, lifting its number of dealerships to around 220 from 193 now.

($1 = 0.6034 British Pounds) (Reporting by Costas Pitas; Editing by Kate Holton and Mark Potter)