Mellor and ProMech Technologies will occupy a new 5000-square-metre purpose-built manufacturing space to facilitate design engineering, chassis conversions and homologation.
Scarborough Council's planning committee gave the go-ahead for the proposals to build the manufacturing, research and development site at Plaxton Park in Eastfield yesterday.
John Randerson, Chief Technology Officer at ProMech Technologies told The Scarborough News in November last year that the development is making "a long-standing commitment to Scarborough".
Councillors discussed the impact of the project on the surrounding area and environment, and there was a consensus that overall the development would be beneficial to Scarborough.
Reporting to councillors on a document discussing the application, a council officer said: "The application is an opportunity for an established business within the borough, without prejudicing the character of the area, highway safety, or amenities."
Mark Clissett, Mellor's Bus Division Managing Director, said: "This is one of the most important investments that Mellor has ever made."
Mellor (Scarborough) will support the company's existing manufacturing base in Rochdale while boosting capacity and adding significant technological capability.
The new development will also create up to 50 new jobs, as well as relocating staff from an existing site in Eastfield.
The manufacturing hub is said to be "in the magnitude of millions of pounds" and is expected to be complete between July and September 2022.
The factory, which will be built on a 2.03-hectare site close to Scarborough Business Park, did however raise some eyebrows among members of the planning committee.
Referring to the units of measurement used in the report, Cllr Sam Cross said: "One thing I'm going to say is that I know what an acre is, but I don't know what a hectare is. We are outside of the EU now, so we should start talking about acres. A man is six foot tall, he's not 1.82m. Thank you."
Mr Randerson, who was born and brought up in Filey and has lived and worked in Scarborough, said: "Sometimes people think 'oh it's a seaside town', but I think it has so much more to offer than that label. I think it is often overlooked that there is a really talented pool of good employable people in the region."
Partnerships with local schools and colleges will be formed to promote science, technology, engineering and mathematics learning among young people to ensure a talented future workforce.
It is not initially expected that the new development will directly compete with bus and coach builder Plaxton.
The plans were unanimously approved by councillors, subject to certain conditions.