Are New Blowouts Setting-In For The UK?

  • Feb 04, 2019 GMT
  • Team Kalkine
Are New Blowouts Setting-In For The UK?

Nissan to manufacture its X-Trail SUV series in Japan instead of the UK

As at February 4, Japanese car maker Nissan Motors (7201.T) indicated that the company aims to manufacture its new X-Trail SUV in Japan instead of Britain. Earlier in 2016, the company announced that it would manufacture its new X-Trail SUV series at its Sunderland plant, which is situated in the UK.

In a letter issued by Nissan to its workers, uncertainties around Britain’s divorce from EU bloc is not helping the company to plan its future in the UK. Workers union at Sunderland plant described this move as discouraging, and they are deeply concerned on this move.

The British government described this move as “a hurricane” for the automotive sector but assured no current jobs would be at risk because of this move.

Nissan manufactures a number of its car series ranging from its market leader Qashqai, Juke, Leaf, Infiniti Q30 and Infiniti QX30 at its Sunderland plant since 1986, and provides employment to 7000 workforces approximately.

What is driving this move?

Brexit Uncertainties

The risk of no-deal Brexit is felt deeply and widely within the automotive sector, and a number of car makers including Honda, Toyota, BMW, Jaguar Land Rover, Vauxhall, and Nissan have exhibited fears of disruption to their supply chain or disruption in their just-in-time supply chain model in the event of no-deal Brexit.

The Society of Motor Manufacturers and Traders has warned the British government that hard boarder or disorderly Brexit could be a hurricane for the UK’s automotive industry, which would slash thousands of jobs and shifting manufacturing location of car makers from the UK to other countries could be seen frequently. On 31st January, the Society of Motor Manufacturers and Traders in fact presented investment data for the UK automotive sector; and as per the data, during CY18, industry witnessed a total investment of 589 million pounds, which is approximately 50 percent down from CY2017 investment.

Changing Emission Regulations and other issues

On the move described above, the Japanese Car Maker, Nissan commented that since 2016, general environment for the car industry in Europe has not been favourable. This includes changing emission norms, in the UK, and cars that failed to comply with the latest emission standard have been charged a levy. “The future of both petrol and diesel vehicle is at risk in the UK and many other European countries, as a number of European countries including the UK announced ban on the petrol and diesel vehicles in future,” company added.

As a result, diesel car sales in the UK market plumped 30% in 2018 over 2014 sales, according to the data revealed by The Society of Motor Manufacturers and Traders.

Although Nissan management confirmed that no jobs at Sunderland plant would be lost, the company will continue to manufacture its Qashqai, Leaf, and Juke models at Sunderland plant and company will be adding manufacturing of the new Qashqai model from 2020. At present, Nissan builds around 30 percent of the UK’s cars and exports majority of its cars in the European market.

Mr. Greg Clark, Britain’s Business Minister, said: “this move is a hurricane for Britain’s automotive sector.” New X-Trail SUV model was supposed to create 750 jobs, but this decision would hit none of the working force in the future.

Britain is scheduled to leave EU bloc on 29th March. Members of the House last month thrashed down Theresa May’s divorce deal, which is creating fear of disorderly no-deal Brexit and threat of hard border between EU and Britain.

On Sunday, the British Prime Minister Theresa May said she is looking for a pragmatic solution for these issues.

Meanwhile, Jacob Rees- Mogg, a conservative Brexiteer, said car maker Nissan has many problems which has got nothing to do with the Brexit, including significant corporate governance issues arising from its previous Chairman Carlos Ghosn’s arrest.

Company Profile; NISSAN MOTORS (7201.T)

Nissan Motors manufactures and sells vehicles and automotive parts. The group’s products portfolio comprises passenger vehicles, minivans, wagons, commercial vehicles, trucks, Zero Emission Vehicles, and Sports Utility Vehicles. It also provides sales finance and leasing services to support sales activities of its businesses. The group markets its vehicles under Nissan, Infiniti, Datsun, and Heritage brands. It offers these products and services through its retail outlets in Japan and the regions across Europe, the Middle East, Africa, Asia Pacific, and the Americas. Nissan is headquartered in Yokohama-shi, Kanagawa-Ku, Japan.

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