Nissan sparks Brexit shockwaves through UK auto sector

Nissan’s decision to axe planned production of the X-Trail SUV in the Brexit-backing city of Sunderland is a heavy blow to the British auto sector, which repeatedly warned against quitting the EU.

The Japanese carmaker revealed Sunday that the crossover vehicle would no longer be manufactured at its vast plant in Sunderland, northeastern England, despite Brexit assurances from the government.

Nissan has become the latest corporate big-hitter to slash investment in the face of heightened economic uncertainty and a potential no-deal Brexit.

“Brexit uncertainty has decimated investment in the UK auto industry and until that position is clarified, manufacturers are struggling to find a risk-free case for investing further here,” Cardiff University professor Peter Wells told AFP.

“Clearly there is a feeling that the short-term to medium-term investment opportunities here are not what they were — and they are certainly higher risk.

“And I think there are real concerns over access to European markets and access to markets where the European Union has established agreements.”

The sprawling facility, producing cars destined for the European continent, also faces weak demand for high-polluting diesel cars — which face tighter regulation worldwide.

“The ongoing backlash against diesel… has affected not just Nissan but other companies here, and that’s exacerbated the other problems faced by the industry as a whole,” added Wells.

In Britain alone, new car sales slid in 2018 on weak demand for diesel vehicles, as consumers continued to ditch diesel cars for automobiles seen as more environmentally-friendly.

Clock ticks to Brexit

Nissan has decided to move assembly of X-Trail cars to its global production hub on the island of Kyushu in southern Japan, reversing a decision made in October 2016.

Shockwaves quickly spread to London, where Prime Minister Theresa May faces an uphill battle to agree a Brexit deal with Brussels as the clock ticks down to EU departure on March 29.

Sunderland, which has a population of 300 000, voted in favour of leaving the European Union in the June 2016 referendum.

“Nissan’s announcement is a blow to the sector and the region,” said Business Secretary Greg Clark.

The company employs 7 000 people at the Sunderland plant — its largest in Europe — which has produced cars since 1986.

Some commentators argue that the recent sacking of disgraced Nissan boss Carlos Ghosn likely also prompt the decision.

“I think that he (Ghosn) was critical in getting the assurances from the UK government and making the decision to bring production to the UK,” Aston Business School professor David Bailey told the BBC.

“It was shortly after his demise I said… that we may see a re-evaluation of some of those investment decisions, that is exactly what we’ve seen.”

Nissan has committed to the manufacture in Sunderland of the current Qashqai, Leaf and Juke models and the new Qashqai from 2020.

The giant is a major employer in the city, a former industrial powerhouse that has suffered decades of economic decline.

No-deal threat

However, professor Christian Stadler at Warwick Business School warned that Nissan could shift even more production in the event of no deal.

“Should it be a hard Brexit, I would not be surprised if also the decision to produce the Juke and the Qashqai might be re-examined,” he told AFP.

“If you have no trade (deal) with Europe then it might make more sense that you produce them in Japan and ship them from over there. At least you have a trade agreement.”

Britain is currently on course to crash out of the bloc on March 29 after MPs last month voted massively against a divorce deal struck between May and EU leaders in December.

“The government’s Brexit negotiations didnt deliver what … Nissan was hoping would come out of this,” added Stadler.

Global automakers are also struggling in the face of China’s economic slowdown, alongside its ongoing trade row with the United States.

“China has been the fastest growing market for automobile producers for years and we have seen most recently for the first time a decline on the demand side,” Stadler noted.

“You might still have to factor in reduced demand in China. That’s a big worry for the industry.”

© Agence France-Presse

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Roland Jackson
Guest Author

Related stories

An African free trade area is in our sights

Successes and failures from other initiative such as the European Union will be instructive, but much work must be done before the African Continental Trade Area becomes a reality

Covid-19: An opportunity for universities to regain public trust

The coronavirus pandemic has brought the role of universities in nurturing scientific inquiry and evidence-based policy-making to the fore

Isuzu, the Chuck Norris of bakkies

The D-Max isn’t a luxury ride, but it’s not too tough on the purse and can handle the rough road

Motoring dreams for the future, now

Technology that would have been the stuff of dreams in the past decade is quickly coming to life. Practical, silly or bombastic, it’s news that has heads turning, writes Luke Feltham

The fable of SA’s special economic zones

The country is being pushed to develop more SEZs. But is this a viable strategy, given unemployment and ‘deglobalisation’?

Top five ugliest cars ever to have hoodwinked South Africans

There is an overflow of garbage on our city streets. We’re not talking about plastic this time, but rather unsightly, wheezing,...

Subscribers only

SAA bailout raises more questions

As the government continues to grapple with the troubles facing the airline, it would do well to keep on eye on the impending Denel implosion

ANC’s rogue deployees revealed

Despite 6 300 ANC cadres working in government, the party’s integrity committee has done little to deal with its accused members

More top stories

Hawks swoop down with more arrests in R1.4-billion corruption blitz

The spate of arrests for corruption continues apace in Gauteng and the Eastern Cape.

Catholic NGO boss accused of racism and abuse in Sudan

The aid worker allegedly called his security guard a ‘slave’

Agrizzi too ill to be treated at Bara?

The alleged crook’s “health emergency” — if that is what it is — shows up the flaws, either in our health system or in our leadership as a whole

SANDF hid R200m expenditure on ‘Covid’ drug it can’t use

Military health officials are puzzled by the defence department importing a drug that has not been approved for treating coronavirus symptoms from Cuba

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday