Nissan Motor Co. abandoned a plan to make the X-Trail sport-utility vehicle at the U.K.’s biggest auto factory, saying uncertainty over Brexit isn’t helping on future investment.
“We appreciate this will be disappointing for our U.K. team and partners,” Nissan Europe Chairman Gianluca de Ficchy said in a statement Sunday. “While we have taken this decision for business reasons, the continued uncertainty around the U.K.’s future relationship with the EU is not helping companies like ours to plan for the future.”
Nissan’s move is another setback for the British car industry, which reported a 46 percent drop in investment last year as carmakers delayed decisions on upgrading machinery and factories amid mounting concern about the impact of a hard Brexit. Nissan two years ago agreed to make the SUV in Sunderland after winning government pledges for access to the EU. Sunderland voted 61.3 percent to 38.7 percent to leave the EU.
“It is a massive psychological blow as well as an economic blow,” Liberal-Democrat Party leader Vince Cable said on “Sophy Ridge on Sunday” on Sky News before Nissan confirmed the decision. “I think Brexit is clearly a major factor. It may be one of several but it is certainly a major factor and it’s not just for Nissan, the same calculations are being made throughout the current industry.”
The U.K. government is warning that the Brexit negotiations are likely to go down to the March 29 deadline, with the threat of a chaotic no-deal split casting a shadow over businesses. Prime Minister Theresa May is expected to return to Brussels in days in a bid to rewrite the most difficult chapter in the withdrawal agreement with the EU.
The X-Trail model was to be made in the U.K., as announced in 2016, after Nissan and the U.K. government reached a deal on future investment, which the company said would secure and sustain the factory’s 7,000 jobs.
Greg Clark, the U.K. business secretary when the deal was struck, later said he had promised the Japanese automaker that the government would seek to maintain tariff-free access to the European Union once the U.K. has left the bloc. The deal was struck before formal talks on the withdrawal began.
In the statement Sunday, the automaker sought to allay concerns of employees. “Our workforce in Sunderland has our full confidence, and will continue to benefit from the investment planned for Juke and Qashqai,” de Ficchy said in the statement.
Nissan’s statement didn’t give a reason for the decision, but Sky News reported earlier that the management cited emissions regulations and reduced sales forecasts.
Sky News reported that a letter from the management to Sunderland’s 7,000 factory staff said that the announcement would be “interpreted by a lot of people as a decision related to Brexit” and that “uncertainty around the U.K.’s future relationship with the EU is not helping companies like ours to plan for the future.”
Current production in Sunderland includes the Nissan LEAF, Europe’s best-selling electric car, which reached a record 46,989 unit last year, up 177 percent from the previous year, according to the company.