Nissan tells Sunderland workers new X-Trail model will be made in Japan as boss says 'Brexit uncertainty not helping'

‘Uncertainty around the UK’s future relationship with the EU is not helping companies to plan for the future,’ says chairman

Nissan has confirmed it has abandoned plans to build the new model of one of its flagship vehicles at its plant in Sunderland.

Instead, the next-generation X-Trail SUV will be made in Japan, the manufacturer confirmed in a letter to workers.

The carmaker’s Europe divison boss said Brexit uncertainty had played a part in the decision, in addition to reduced sales forecasts.

Gianluca de Ficchy said the announcement would be “interpreted by a lot of people as a decision related to Brexit” and that “uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future”.

The decision is a further blow to the UK car industry, following recent moves by Ford, Jaguar Land Rover and Honda to reduce their workforces and cut costs.

Nissan had already voiced concerns about Brexit before finally committing – four months after the EU referendum – to build the new Qashqai and X-Trail models in its Sunderland factory.

It then emerged the government had “offered reassurances” to the company, sparking concerns over secret deals. Two years later the correspondence with the business ministry has still not been released publicly because it is deemed to be too commercially sensitive.

Reacting to Nissan’s announcement, Labour leader Jeremy Corbyn said: “The Conservatives’ botched negotiations and threat of a No Deal Brexit is causing uncertainty and damaging Britain’s economy.”

Sharon Hodgson, Labour MP for Washington and Sunderland West, said: “This is a great loss of future investment in Sunderland and I am sure that many people will share my huge disappointment and concern at this news.

“Tomorrow, I will be seeking answers from government ministers as a matter of urgency.”

Mr de Ficchy said in his letter to workers that the situation had changed since the initial announcement.

“At that time they were both planned as ‘traditional’ models, powered by internal combustion engines,” he wrote. “X-Trail was already going to be made in Kyushu, but there was a good business case for bringing production to Europe as well.

“Since that time, as you know, the environment for the car industry in Europe has changed dramatically. To meet the changing emissions regulations we’ve had to invest much more in new powertrains for our future models like X-Trail. At the same time, the volume forecasts for X-Trail in Europe have reduced.

“For those reasons the company has decided to optimise our investments and concentrate production in Kyushu, instead of adding another production site. For the European business, this does not change the fact that X-Trail is – and will continue to be – a crucial model for us.

“Today’s announcement will be interpreted by a lot of people as a decision related to Brexit. We have taken this decision for the business reasons I’ve explained, but clearly the uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”

Nissan still has “full confidence” in its workforce in Sunderland and is investing heavily in the new Juke model and the next-generation Qashqai, Mr de Ficchi added.

“With the UK’s departure from the EU on 29 March getting closer every week, we have a taskforce in place, reporting to me, that is considering all of the possible scenarios and the potential impact on the business,” the letter continued.

“As a responsible business with 16,000 employees in the region, I want you to know that we are preparing across all functions, and with our supply chain, for anything that might impact our current business model. When the time comes to initiate any of those plans, we will be ready, and we will communicate with full transparency to all of you.

“We appreciate this will be disappointing for our UK team and partners.”

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), described the fall in investment as “deeply depressing” and said it should send a strong signal to politicians to secure a Brexit trade deal.

Just over 1.5 million cars left UK factories in 2018, a 9.1 per cent decline on the previous year and the lowest for five years. Production of diesel cars was down by 22 per cent to 561,000 last year.

Additional reporting by Press Association