Nissan warns over its future EU production levels

Nissan has given the starkest warning yet on the future of the Japanese group’s car factories in western Europe, with a plant in the UK threatened by Brexit and another in Spain suffering from a slump in demand.

Nissan warns over its future EU production levels

Nissan has given the starkest warning yet on the future of the Japanese group’s car factories in western Europe, with a plant in the UK threatened by Brexit and another in Spain suffering from a slump in demand.

The Sunderland site in England, which makes models that account for the bulk of European sales, remains under a cloud of uncertainty, Gianluca de Ficchy, chairman of Nissan Europe, said.

Should Britain fail to reach a free-trade agreement with the EU, a resulting 10% tariff on cars and parts could not only spell the demise of the plant, which sends about three-quarters of its output to the continent, but also of Nissan’s entire European strategy, the executive said.

“We would not be viable,” he said. “We just wouldn’t be able to sell our cars.”

Nissan’s latest warning on Sunderland, the UK’s biggest car plant, comes after Boris Johnson began talks aimed at hammering out a trade deal with the EU before the end of the year. Adding to the pressure on the Asian manufacturer are declining sales and profitability.

Nissan cut its full-year profit outlook this month and scrapped its year-end dividend payout, with the carmaker’s stock down about 21% since the start of 2020. A turnaround plan isn’t due for another three months.

Sunderland makes the Qashqai, Nissan’s European best-seller, along with the Juke and the electric Leaf. Mr de Ficchy raised the possibility that the models could be made at partner Renault’s plants, but such a production upheaval would be costly and take years to put in place at a time when the car market is becoming increasingly competitive and undergoing a technological shift.

“My working hypothesis is to stay in Europe with a factory in England,” Mr de Ficchy said. Nissan, nevertheless, sees lower European sales in 2020, mostly due to its model range, and last year opted not to make the X-Trail SUV in Britain.

To encourage a revival, Nissan unveiled a new version of its Juke crossover, aimed at the European market, earlier this month. The same platform is being used by Renault to assemble the latest versions of the Clio supermini and Captur crossover, built across the Channel in France.

In Spain, Nissan’s Barcelona plant is experiencing a drop in volumes and “is a subject that we are examining,” Mr de Ficchy said.

Nissan has met Spanish unions to explain a need “to review our strategy in Europe including in Barcelona.”

- Tara Patel, Bloomberg

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