Nissan Close to Making Post-Brexit Investment Decision

October 21, 2016, 3:18 PM UTC
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Employees prepare a Nissan Juke on the production line at the Nissan Motor Co. production plant in Sunderland, U.K., on Thursday, Dec. 3, 2015. Nissan rose 0.7 percent at the close Thursday in Tokyo trading. Photographer: Luke MacGregor/Bloomberg via Getty Images
Photograph by Luke MacGregor — Bloomberg via Getty Images

Japanese carmaker Nissan will decide next month whether to make its new Qashqai model in Britain or elsewhere in the first major investment decision affecting the country’s car industry since the vote to leave the European Union.

Chief Executive Carlos Ghosn, who met British Prime Minister Theresa May last week, said on Friday he had been reassured by the government it would be “extremely cautious” about preserving the competitiveness of Nissan‘s factory in northern England.

Ghosn warned after the vote to leave the European Union in June thatNissan could halt investment in Britain’s biggest car factory which made nearly a third of the 1.6 million vehicles produced in the country last year.

Businesses are concerned that Britain is heading towards a so-called hard Brexit that would leave it outside the European Union’s single market and facing tariffs of up to 10 percent to export cars to the trading bloc.

Ghosn said in September he could scrap new investment at Nissan‘s Sunderland plant without a guarantee of compensation for costs related to any new tariffs resulting from Brexit.

“We’re not asking for any advantage (from the government), but we don’t want to lose any competitiveness, no matter what the discussions,” Ghosn told reporters at Nissan‘s headquarters in Yokohama, Japan, on Friday.

“As long as I have this guarantee … I can look at the future of Sunderland with more ease,” said Ghosn, who is also CEO of French carmaker and Nissan partner Renault.

Production of Nissan‘s next-generation Qashqai sport utility vehicle (SUV) is expected to begin in 2018 or 2019 and the time it takes to bring a new vehicle into production means the Japanese company must decide where to build the car soon.

Its Sunderland factory, which already builds the current version of the popular Qashqai and many other Nissan models sold throughout Europe, produced 475,000 vehicles last year of which 80 percent were exported.

A company source told Reuters last week that no further meeting between May and Ghosn had been scheduled but senior Nissan and government officials would continue meeting in the coming weeks.

Six foreign-owned carmakers account for almost all of Britain’s output. The biggest producer, Jaguar Land Rover, which is owned by India’s Tata Motors, said last month it would “realign its thinking” on investment after Brexit and wanted a level playing field for all firms.

Japanese companies Honda and Toyota, as well as Germany’s BMW and U.S. automaker General Motors also build cars in Britain.

Nissan completed a deal this week to take a controlling stake in rival Mitsubishi Motors Corp, retaining the embattled carmaker’s chief executive in a bid to help it recover from a mileage cheating scandal.

Ghosn said on Friday he expected the bulk of Nissan‘s initial cost savings from the partnership to come from purchasing and engineering, as Nissanbenefits from Mitsubishi’s local supplier network in Asia and uses the smaller automaker’s technology for plug-in hybrid vehicles.