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Nissan casts further gloom on car industry with X-Trail blow | Business News

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Nissan will drop another bombshell into the heart of Britain’s car manufacturing ‎industry next week by announcing the cancellation of plans to manufacture its X-Trail model in the UK.

Sky News has learnt that the Japanese car-maker’s executives will confirm the move on Monday, casting further gloom over an already-embattled sector.

Sources said the X-Trail move would be interpreted as projecting renewed doubt over Nissan’s future investment in the UK.

It will be an explosive intervention in the debate about Britain’s future car production capability less than eight weeks before the UK is scheduled to leave the European Union.

Precise details of Nissan’s impending announcement were unclear this weekend, but sources said ‎it was likely to initially involve abandoning the X-Trail production plans which had been announced in the autumn of 2016.

It is not expected to have a major impact on jobs because the plans related to future investment activity.

Nissan employs roughly 7,000 people in Sunderland, and was thrust into the heart of the Brexit debate in 2016 when it received a letter from government ministers offering undisclosed reassurances about the company’s future competitiveness.

Four months after the referendum, the Japanese car-maker said it would build its next-generation Qashqai sports utility vehicle and a new X-Trail model in Sunderland.

The X-Trail is currently produced exclusively in Japan.

Nissan Sunderland plant

Nissan’s Leaf electric car and a number of other models such as the Juke and QX30 are also made there, with around 440,000 vehicles produced by the factory’s workers last year – putting it a close second to Jaguar Land Rover in UK car production.

It was unc‎lear this weekend whether Nissan had sought additional support from the government to prevent its u-turn on the X-Trail.

One automotive analyst said that falling consumer demand for diesel vehicles and Nissan’s weak recent sales performance in Europe were likely to be factors in the decision.

The consequences of the announcement for the longer-term future of Sunderland were uncertain, although some car industry insiders believe that Nissan may seek to further scale back its operations there during the coming years.

Nissan has been plunged into chaos in recent months following the arrest and resignation of its former chairman Carlos Ghosn amid allegations of financial impropriety.

Its announcement next week will inevitably intensify calls for Theresa May to rule out a no-deal Brexit amid growing evidence that multinational investors in the UK are accelerating plans to divert investment to other parts of their global operation.

Cabinet opponents of a no-deal departure, such as the Business Secretary Greg Clark and Philip Hammond, the chancellor, are also likely to cite Nissan’s move as ‎evidence of the impact that the current uncertainty is having on the economy.

Airbus, the aerospace group which also employs thousands of people in Britain, has also intensified threats to withdraw from the UK in the event of a hard Brexit, warning that while it would not close factories “overnight”, their future would be increasingly uncertain.

In recent months, a number of big overseas car-makers, including BMW and Honda, have said they plan to idle factories for short periods soon after Brexit‎, in many cases bringing forward annual summer shutdowns.

The car industry operates on a just-in-time production basis, meaning delays to parts imports carry ‎huge financial costs.

‎Job cuts have also formed part of the automotive sector’s growing response to Brexit, with Ford confirming on Friday that is cutting up to 400 jobs at its Bridgend engine plant.

Last month, JLR said it would axe 4,500 jobs, with many of them management roles in the UK.

Nissan Production Line Sunderland

The Ford job losses represent the first phase of a redundancy push that could ultimately see many thousands of roles axed across its struggling European operations.

Ford employs about 13,000 people in the UK, roughly a quarter of its 54,000-strong workforce across Europe.

Last week, Sky News revealed that Ford had calculated that a no-deal Brexit would cost the company as much as $800m (£614m) this year alone as a result of World Trade Organisation (WTO) tariffs and the weakening pound.

Ford executives have already outlined plans for a wide-ranging restructuring of its operations in Europe, which is ultimately likely to affect many thousands of jobs.

The company also operates another engine plant at Dagenham in Essex, as well as a number of other facilities across the UK.

This week, the Society of Motor Manufacturers and Traders published figures showing that investment has slumped during the last 12 months.

Nissan refused to respond to requests for comment on Saturday.

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