Nissan to review Sunderland production in no-deal Brexit

Nissan will review its decision to build the Qashqai sport utility vehicle at its Sunderland plant if Britain leaves the EU without a deal, according to three people with knowledge of the matter, a move that could prompt the eventual closure of the site.

The Japanese carmaker pledged in November 2016 to build the SUV in the UK, safeguarding thousands of jobs, after its then chairman Carlos Ghosn received assurances from the British government that its operations would be protected from the impact of Brexit.

But following last year’s ousting of Mr Ghosn and a collapse in profits, Nissan has undertaken a global review that makes everything including the Sunderland plant vulnerable to downsizing or closure.

The carmaker's decision to manufacture in the UK was contingent on a "soft" Brexit that includes a trade deal or transition arrangement, a decision that it would reassess if Britain leaves the EU without any deal, according to two people familiar with its original investment decision.

Nissan said: “Today we are among those companies with major investments in the UK who are still waiting for clarity on what the future trading relationship between the UK and the EU will look like.

“As a sudden change from those rules to the rules of the WTO will have serious implications for British industry, we urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade.

“While we don’t comment on speculative scenarios, our plans for Qashqai production in Sunderland have not changed.”

“Since 1986, the UK has been a production base for Nissan in Europe. Our British-based R&D and design teams support the development of products made in Sunderland, specifically for the European market.

“Frictionless trade has enabled the growth that has seen our Sunderland plant become the biggest factory in the history of the UK car industry, exporting more than half of its production to the EU.”

The Qashqai, a family SUV, accounts for more than two-thirds of the 440,000 cars made at the site, Britain's largest car facility. It is also made in Japan, and exported to the US and other markets.

Losing the model would not only prompt the Sunderland plant to cut a significant number of its 7,000 jobs, but would also threaten the viability of the site by making it more difficult for the facility to win new models in the future. Sunderland also makes Nissan’s Juke, a small SUV, and its electric Leaf car.

Under a trade deal between Japan and the EU, Nissan would be able to export the Qashqai from its home market to Europe without tariffs, while its UK-built cars may face tariffs when selling to Europe after Brexit.

Prime minister Boris Johnson, who is due to address the Conservative party conference on Wednesday, has said he wants the UK to leave the EU on October 31st with or without a deal.

Other car companies have publicly warned about the impact of a no-deal Brexit, with Vauxhall-owner PSA saying it would relocate the Astra from Ellesmere Port to a European plant in the event of a no-deal exit.

Earlier this year, Nissan reversed a 2016 decision to build the X-Trail vehicle in Sunderland, a year after laying off hundreds of workers at the site because of a sharp decline in diesel sales across Europe. It has also stopped production of the Infiniti Q30, a premium model, at the site.

In July, the Japanese group said it would cut another 90 jobs in the UK as part of a reduction in its global workforce by 12,500 in an effort to revive its business.

The Sunderland plant is one of the carmaker’s international crown jewels, ranking among its most efficient sites outside of Japan. Set up in 1986 as part of Margaret Thatcher’s policy to woo international carmakers to the UK, it was always dedicated to making vehicles for the European market.

Nissan’s investment in the Sunderland plant now exceeds £4 billion over its lifetime, with a further £100 million spent to prepare for the new Juke model, which begins production next month.

Around three-quarters of the site’s cars are exported, with more than half going to Europe, while the majority of the components going into the cars come from outside the UK.

At the time of its investment decision, Nissan received a letter from the government promising to offset the impact of Brexit on its cross-border business model. The letter from then-business secretary Greg Clark, which was revealed by the Financial Times in February, assured the company the government would negotiate to try and ensure it would not be "adversely affected" by Britain's exit from the EU. – Copyright The Financial Times Limited 2019