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Nissan Motor has cancelled plans to produce the next generation X-Trail in the UK, citing continued Brexit uncertainty as one of the factors that contributed its change of heart, according to Sky News citing company sources. A formal announcement by the company is expected on Monday.

The decision is not expected to lead to job losses at the Sunderland plant, as the X-Trail is not currently produced there, but it does raise doubts about future investment in the UK by the Japanese automaker. The Sunderland plant produces the Quashqai SUV, which uses the same platform as the X-Trail, and also the smaller Juke SUV. 

The Japanese automaker originally said it would produce the next generation X-Trail SUV at its Sunderland facility in the North-East of England just two months after the UK decided to leave the EU in a national referendum in June 2016. Nissan’s decision at the time, including production of the next-generation Quashqai in the plant, was made after it received private assurances by the UK government on future access to EU markets.

Brexit is clearly not the only reason behind Nissan’s decision to reverse its UK production strategy in favour of sourcing the X-Trail from Japan, which is the main production location for this vehicle. There are also questions about future global demand for diesel vehicles, with governments around the world increasingly concerned about emissions. Japan and the EU have also signed a free trade deal which would enable Nissan to ship Japanese made cars to the EU tariff-free (avoiding the Common External Tariff of 10% applying to car imports).

Nissan’s total exports from Japan to Europe plunged by 62% to 23,664 units in the nine months between April-December 2018, while to North America volumes fell by 21% to 217,523 units.

Overall production of Nissan vehicles globally fell by 5% to 4,089,816 units in the same nine-month period, with the UK the worst hit – with a 12.6% decline to 312,259 units. Production in Japan in this period was down by 7.4% at 678,011 units despite a 4% rise in domestic sales.

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By GlobalData

The UK government’s failure so far to negotiate a smooth exit from the EU is clearly holding back investment in the country’s automotive industry, according to recently-published data.

For PLDB subscribers: Current X-Trail

Future X-Trail