Japanese automobile manufacturer Nissan announced that it has canceled its plans to manufacture its X-Trail SUV in Sunderland, which will instead be manufactured in Japan. The plan to manufacture X-Trail SUV in the North-Eastern part of the country was announced in 2016; however the looming uncertainty about Brexit has forced the automobile giant to reconsider its investment plans.
Nissan has stated Brexit as a reason for the shift of investment plans. Nissan’s Europe chairman Gianluca de Ficchy stated that the continued uncertainty over Brexit has made it difficult for the company to plan its future investments. He added that although decision for the X-Trail manufacturing has been changed, other next generation models like Qashqai and Juke which were planned for Nissan’s Sunderland plant will be unaffected by the decision.
The decision to invest which came in 2016 was taken by many as a vote of confidence in Britain’s future after Brexit, and Prime Minister Theresa May personally assured Nissan’s then Chief Executive Carlos Ghosn to invest in UK. Government pledged that there would no effect of Brexit on supply chains and also made commitments for training and research & development.
Critics say that Brexit is not the main reason behind the Sunderland decision. The demand for diesel vehicles has been in decline after the Volkswagen emissions scandal which was followed by increased political scrutiny of diesel vehicles owing to their environmental impact. Buyers showed a disinclination towards diesel vehicles in fear of stricter rules and extra cost.
Nissan which came to UK in 1986 as part of Prime Minister Margaret Thatcher’s bid to attract businesses to UK and create a business friendly environment was soon followed by other manufacturers including Honda and Toyota. The Sunderland plant is its largest plant in Europe which employs around 7000 people. Although the company has stated that the X-Trail decision will not affect its current operations and level of employment in Sunderland plant, trade unions have shown apprehensions about the future of car industry in Britain.
Julie Elliott, a labor MP said that Brexit has played an inevitable role in Nissan’s decision to shift investment to Japan. She added that it is not conducive for the country’s business environment and its ability to attract investments. Currently, Nissan’s Sunderland manufactures LEAF electric cars at the unit which reached a production level of 46,989 units last year.