04 February, 2019

Nissan pulls UK investment amid Brexit chaos as X-Trail heads to Japan

Japanese vehicle manufacturer Nissan has decided to build its next-generation X-Trail model in Japan, as it pulls investment from its Sunderland plant in the UK amid ongoing Brexit uncertainty.

The company had initially announced it was to build the next iteration of the SUV in Britain, alongside its Qashqai, Leaf and Juke models. Both the new Qashqai and X-Trail were due to start production in 2020. However, with the prospect of a no-deal Brexit threatening, the manufacturer has said it is changing its manufacturing model and will concentrate X-Trail production in its home country.

Nissan Executive Vice President for Manufacturing and Supply Chain Management, Hideyuki Sakamoto, said: ‘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.’

Nissan Europe 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.

‘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.’

The Japanese manufacturer has a task force that is considering all of the possible Brexit scenarios and the potential impact on the business, de Ficchy said in a letter to staff.

Nissan received assurances of compensation should tariffs be introduced as a consequence of the UK leaving the EU without a deal. World Trade Organisation rules recommend a 10% fee on top of every imported and exported item. With components constantly crossing borders, this could mount up for the company. There are also fears that customs delays would cause production bottlenecks, an issue that has seen BMW, Honda and Jaguar Land Rover announce the suspension of production in April.

Nissan says that since the announcement of the X-Trail coming to Sunderland in 2016, it has increased its investments in new powertrains and technology for its future European vehicles. The company has therefore decided to optimise its investments in Europe by consolidating X-Trail production in Kyushu, the production hub for this global model. Other future models planned for Nissan Sunderland Plant - the next-generation Juke and Qashqai - are unaffected.

Responding to the announcement, UK Business Minister Greg Clark said: ‘Nissan’s announcement is a blow to the sector and the region, as this was to be a further significant expansion of the site and the workforce. The company has confirmed that no jobs will be lost. They have reiterated today their commitment to the UK by continuing to manufacture in Sunderland the current Qashqai, Leaf and Juke models and the new Qashqai model from 2020.

‘The UK automotive industry is a vital sector for the British economy which draws on our combination of rich automotive heritage and cutting edge innovation. Its role in providing highly skilled well-paid jobs, innovative R&D and investment are why we are determined to build on these strengths to make the UK a leader in the next generation of autonomous and electric vehicles through the Automotive Sector Deal, as part of our modern Industrial Strategy.’

The Society of Motor Manufacturers and Traders (SMMT) recently reported that fresh inward investment in the UK automotive market fell by 46.5% in 2018, to just £588 million (€646 million). Investment fell 33.7% in 2017, equating to a drop of £1.1 billion (€1.26 billion).