Nissan warns Sunderland plant can't survive no-deal Brexit

Simon Foy
Nissan plant Sunderland 

Nissan has repeated its warning that the company’s giant Sunderland plant will not be sustainable if the UK and European Union fail to agree a free-trade Brexit deal.  

The carmaker's global chief operating officer Ashwani Gupta hinted that Nissan could be forced to axe the factory if the UK does not secure tariff-free access to EU markets, a move that would lead to thousands of job losses.

It comes less than a week after the future of the Sunderland plant looked secure for years to come following the Japanese company's decision to shut its Spanish factory - leaving the North East site as Nissan's only major facility in Europe.

In an interview with the BBC, Mr Gupta said: "We are the number one carmaker in the UK and we want to continue. We are committed.

"Having said that, if we are not getting the current tariffs, it's not our intention but the business will not be sustainable. That's what everybody has to understand."

Mr Gupta’s statement suggests that Nissan has not changed course from a similar warning about the risk a no-deal Brexit to Sunderland given in October.

Upon announcing the closure of its Barcelona site last week, Nissan said that Sunderland remains an important part of plans for its European business. The site has started producing a new model of the Juke and an updated Qashqai is also expected to roll off its production lines soon, a move likely to safeguard 6,000 workers along with another 27,000 jobs in the supply chain.

On a visit to the plant to celebrate production beginning on a new model in October, Nissan's Europe chairman Gianluca Di Ficcy said manufacturing in the UK would not be affordable without a trade deal.

He said: "If no deal means tariffs, our European business model will be in jeopardy. A 10pc additional cost [from tariffs] means a 10pc additional loss."

Almost 80pc of the 350,000 cars built at Sunderland last year were exported, mostly to Europe. Without a trade deal they would face a 10pc trade tariff under World Trade Organisation rules, pushing up prices and making it much harder to justify the plant. 

A no-deal exit could also wreck the carmaker's ability to quickly and cheaply bring in parts by introducing customs and border controls which would upset its delicate “just in time” supply chain.

A press conference with partner Renault last week seemed to indicate that the two companies - which have a global alliance - wanted to focus production of small and mid-size SUVs which share the same basic platform as those made in Sunderland.

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However, this could prove difficult because of political pressure in France. The Paris Government holds a stake in Renault and has also backed a €5bn loan to the French car maker. 

Professor David Bailey, a car industry expert at Birmingham University, said: “Nissan is effectively trying to put pressure on the UK government by offering the ‘prize’ of future investment if tariffs can be avoided.”

Ian Henry of data firm AutoAnalysis said that a Japan-EU trade deal struck last year could mean that without a zero-tariff Brexit agreement, Nissan will just run down Sunderland and instead export cars built in Japan to Europe.

He added: “It’s a mistake to think that the Sunderland and Barcelona decisions are interlinked.

"The cars produced at the two plants had noting in common except the badges and the Barcelona plant was not producing enough vehicles, meaning closing it down solved a problem for Nissan.”

Mr Henry said while Nissan’s investment in producing the new Qashqai at Sunderland means it is committed to the plant for the life of the new model, failure to agree a trade deal could leave the UK factory unlikely to win future investment.