Japanese firm reverses decision to build next-generation SUV at plant, citing diesel sales slump and Brexit uncertainty
James Attwood, digital editor
5 February 2019

Nissan has cancelled plans to build the next-generation X-Trail at its Sunderland factory, blaming the diesel sales downturn and Brexit uncertainty.

The Japanese firm announced plans to build the next generation of both the X-Trail and Qashqai SUVs at the plant in 2016, securing the future of the plant that employs around 6700 people. It did not announce how many additional jobs would have been created by the addition of the X-Trail line - beyond describing it as "hundreds" - but the decision not to go ahead with the plan is not believed to affect the current workforce at the plant, instead impacting potential future employment opportunities there. Supply chain investments will also be impacted.

Responding to the news, Business Secretary Greg Clark said that Nissan would need to reapply for nearly £60 million of taxpayer support that was offered in 2016 in return for the firm building the next-generation X-Trail, Qashqai and Juke in Sunderland.

Nissan also confirmed in its statement that future production of the Nissan Qashqai and Nissan Juke would remain at Sunderland, including next-generation models of those cars.

Citing the need to invest in future powertrain technology relevant to the Euopean market, Nissan chairman Gianluca de Ficchy said: “Nissan is investing heavily in new technologies and powertrains for the next generation of vehicles in our Sunderland plant. To support this we are taking advantage of our global assets, and with X-Trail already manufactured in Japan, we can reduce our upfront investment costs.

“We appreciate this will be disappointing for our UK team and partners. Our workforce in Sunderland has our full confidence, and will continue to benefit from the investment planned for Juke and Qashqai.”

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“While we have taken this decision for business reasons, the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”

Nissan Executive Vice President for Manufacturing and Supply Chain Management, Hideyuki Sakamoto, added: “A model like X-Trail is manufactured in multiple locations globally, and can therefore be re-evaluated based on changes to the business environment. As always, Nissan has to make optimal use of its global investments for the benefits of its customers.”

Doubts about the future of the Sunderland plant, which currently produces the Juke, Qashqai, X-Trail and Leaf, along with the Infiniti Q30 and QX30, were raised after Britain voted to leave the European Union in 2016.

Nissan eventually committed to the plant’s future after then-chairman Carlos Ghosn struck a deal with the UK Government after a meeting with Theresa May in 2016. Speaking in the House of Commons following the announcement, Clark revealed the Government had pleaged nearly £60 million of taxpayer support to the firm, of which Nissan has so far received £2.6 million. The firm will be required to reapply for the rest.

Clark also said that the making the new X-Trail in Sunderland would have created 741 UK jobs.

Earlier this year, Nissan cut a number of jobs at the plant, in a move understood to be related to a fall in their sales of diesel-powered cars. 

The news is another blow to the UK car industry, after confirmation that car production in the country fell 9.1% year-on-year in 2018. Speaking after that data was published, Society of Motor Manufacturers and Traders boss Mike Hawes said the industry was on "red alert" due to firms halting planned investment because of uncertainly over Brexit.

Read more

Nissan to build next-generation Qashqai and X-Trail in Sunderland (from 2016)

Nissan cutting hundreds of jobs from Sunderland plant

No Brexit deal would have led to Sunderland plant closure (from 2016)

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Comments
59

2 February 2019

Carlos Ghosn was Sunderland's biggest fan.........now that he's gone & the fact that the EU have signed a trade deal with Japan, all the models built in Sunderland will now probably be shifted to plants in the EU, Spain or even in Renault plants in France. I can remember after the Brexit vote the BBC interviewed a member of the public in Sunderland & he replied that Nissan wouldn't close because they (Nissan) couldn't find a workforce as good as those Jordies. Well fact is car companies can find workers anywhere, they just need training, & if they are in low cost countries it's even better for them.

2 February 2019

First they won't get the investment for newer models.   Then they'll shrink the factories down.   And then they'll close.

 

Car manufacturers won't want to get political but Nissan is here because it gives them access to the EU.   That's why Thatcher gave them money to come here too - to create jobs in an area that had few!

 

They even offered Linwood in Scotland to Nissan but given the industrial relations in Scotland they decided to start fresh in Sunderland.   That's how bad the striking workers were!

 

But alas, Brexit is the cause.   Remember too that Mercedes were going to come to Sunderland but decided against it because of Brexit.

 

How will those Brexiter explain to those who are about to lose their jobs the merits of Brexit?   Taking back control of what?   Dole queues?

 

2 February 2019

Companies like Toyota, who play the long game, would manufacture in Britain to maintain tariff-free access to a huge market.

2 February 2019

Would this be the same Toyota who said they'd only build more models in the UK if the UK joined the euro and when that didn't happen built a factory in France?

3 February 2019
Cé hé sin wrote:

Would this be the same Toyota who said they'd only build more models in the UK if the UK joined the euro and when that didn't happen built a factory in France?

 

Yep.  The same Toyota who would like to keep selling cars in England.

3 February 2019
jason_recliner wrote:

Companies like Toyota, who play the long game, would manufacture in Britain to maintain tariff-free access to a huge market.

 

What, 2m cars in a good year? The UK domestic market is relatively insignificant in global terms. It certainly doesn’t warrant a factory on its own.

UK is very good at specialist, high end components and this area of the industry might be protected for a while (although loss of single market will be a big blow). The mass market factories could be gone in five years.

4 February 2019
scrap wrote:

jason_recliner wrote:

Companies like Toyota, who play the long game, would manufacture in Britain to maintain tariff-free access to a huge market.

 

What, 2m cars in a good year? The UK domestic market is relatively insignificant in global terms. It certainly doesn’t warrant a factory on its own.

UK is very good at specialist, high end components and this area of the industry might be protected for a while (although loss of single market will be a big blow). The mass market factories could be gone in five years.

2.5 millionish in 2017 (UK total) according to an article I just found, for 6th largest market. That sounds like it's worth keeping a factory open if it means tariff free sales when the majority of competitors would be subject to tariffs. 

3 February 2019
jason_recliner wrote:

Companies like Toyota, who play the long game, would manufacture in Britain to maintain tariff-free access to a huge market.

We'd have reciprocal tariffs slapped on our cars, or claims for damages for breaching WTO rules (assuming no deal), so that's a bit of a non starter.

4 February 2019
Dave Ryan wrote:
jason_recliner wrote:

Companies like Toyota, who play the long game, would manufacture in Britain to maintain tariff-free access to a huge market.

We'd have reciprocal tariffs slapped on our cars, or claims for damages for breaching WTO rules (assuming no deal), so that's a bit of a non starter.

Other countries use tariffs and non-tariff barriers.  I don't see why England couldn't do the same thing.

jer

2 February 2019

Well make up for it selling bricks to Brazil.

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