Japanese car manufacturer Nissan has provided a welcome pre-Christmas boost to the jobs market by confirming it will hire 1,000 people as part of a £250 million investment into its Sunderland plant.

The plant became the first UK car manufacturer to build half a million cars in a calendar year and, subject to board level approval, Nissan's premium car brand Infiniti, has confirmed it will manufacture its new global model at Nissan's award-winning production base in the North East.

The plant has the capacity to produce up to 60,000 Infiniti models per year, which will be exported around the world.

Around 280 of the new jobs will be in the Sunderland plant itself, with the remainder being split across the company's regions in the UK.

The new premium compact Infiniti model, based on the Etherea concept model, is expected to be produced from 2015 and will allow the company to compete within the heart of the premium segment for the first time, underlining the brand's ambition to become a major worldwide competitor.

When production begins, Infiniti will become the first new car brand to be manufactured in the UK on this scale. However, because of capacity limitations at Sunderland, securing the new Infiniti will mean that a C-segment hatchback previously announced for the plant in April will be manufactured elsewhere in Europe, said Nissan.

Business secretary Vince Cable said in a prepared statement: "Today's news is a strong endorsement of the quality of Britain's car industry which is creating jobs, taking on apprentices and contributing to building a stronger economy."

And John Cridland, the Confederation of British Industry's director-general, welcomed the news as "the cherry on the cake for the UK's automotive industry in 2012, following a year of many success stories across the country".

"This major investment once again demonstrates the competitiveness of UK manufacturing. So we must build on the momentum the industry has gained this year by developing an industrial strategy that will deliver for all of our high-performing sectors in 2013," Cridland added.

Nissan's chief performance officer Colin Dodge told the BBC the new smaller luxury car would be " the size of car for Europe rather than for the US".

The car will be the first Infiniti to be offered with a diesel engine, an option seen as crucial to win over European drivers, Dodge said, though he declined to reveal further details about the engine options for the car.

He added it was "heartbreaking" for Nissan's Japanese staff to see production moved out of the country.

"They can make cars as well as anybody, but they're at a significant disadvantage when compared with rivals selling cars in dollars, euros or pounds."