Nissan production shift could be followed by other firms

7 February 2019

Nissan's move to shift production of its X-trail SUV out of the UK could be the first of many such decisions by companies if a definitive Brexit deal is not concluded soon, CIPS has warned.

The UK automotive sector took a hit when Nissan undertook a U-turn and announced that production would moved from the UK’s largest car plant in Sunderland to the firm’s Kyushu plant in Japan.

Nissan said since the production plan was originally announced in 2016 things had been “re-evaluated based on changes to the business environment”.

A spokesperson from CIPS said: “Though there are no doubt numerous reasons why Nissan chose to make this decision, including the decline in popularity for diesel-fuelled cars, the cloud of uncertainty around Brexit must also be high up the list.

“The timing is interesting. The EU-Japan free trade deal has come into effect just as the UK faces its departure from the EU next month. Staying in the UK will give Nissan the possibility of higher tariffs in a no-deal scenario and fewer reasons to stay as uncertainty still looms. The additional complication of component automotive parts and associated costs and restrictions to those parts also poses risks to the wider automotive sector.

“If the Brexit situation is not resolved in the coming weeks, then it’s possible we will hear from more companies making the same decision.”

Nissan confirmed that while other business factors came into consideration, such as reduction of upfront investment costs, making use of global assets, and consolidating the X-trail at its main production hub in Japan, “the continued uncertainty around the UK's future relationship with the EU is not helping companies like ours to plan for the future”.

Hideyuki Sakamoto, Nissan’s executive vice president for manufacturing and supply chain management, 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.”

Greg Clark, secretary of state for business, energy and industrial strategy, commented: “The company has confirmed that no jobs will be lost. They have reiterated 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.”

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