The new model, billed as the world's most expensive SUV, will go on sale in 2016, VW said on Tuesday. The project will create over 1,000 jobs in the UK, Europe's second-largest auto market, and require over $1.23 billion of investment over the next three years.
The automaker only released a sketch of the car. But Bentley showed off an SUV concept car, the Bentley EXP 9 F Concept, at the Geneva Auto Show in 2012. Click through for pictures of what the world's most expensive SUV might look like:
The push towards off-roaders is aimed at boosting profitability at Bentley, which accounted for no more than 1 percent of the VW group's first-quarter earnings of $3.09 billion.
But the Bentley SUV may face competition from VW stable mate 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.
Bentley is known for sleek models with a racing pedigree. Its redesigned Flying Spur has a 6-litre, 12-cylinder engine generating 616 horsepower and a top speed of 200 miles per hour.
It is targeting annual sales of between 3,000 and 4,000 SUVs priced at above 150,000 euros. The new model would be key to almost doubling Bentley's worldwide deliveries to 15,000 autos by 2018.
"This decision will ensure sustainable growth for the company," said Bentley Chief Executive Wolfgang Schreiber.