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Nissan Deal Means U.K. Can Resume Output Increase-Report

Nissan Deal Means U.K. Can Resume Output Increase-Report.

“it shows a resolute determination and prioritisation amongst negotiators to secure a free trade deal for UK manufacturing ”

Britain’s car production will increase at a faster than predicted rate from 2018 to 2019 following the decision by Nissan Motor to not only retain output at its Sunderland plant, but to add two SUVs, BMI Research said in a report.

“Nissan’s announcement has boosted our conviction that vehicle production will remain buoyant past 2018 despite a British exit from the E.U. and we are revising up our 2019 and 2020 passenger car production forecasts to growth of 6.0 per cent and 2.3 per cent respectively up from 4.0 per cent and 1.7 per cent previously,” BMI Research said.

“The deal is critical given that Nissan is the U.K.’s largest vehicle producer and accounts for 30.0 per cent of total car production which makes it a bellwether for automaker sentiment in the country and a major consideration in our production forecasting,” BMI said.

In late October Nissan said it would make the new Qashqai at the Sunderland plant, and the X-Trail too. No details were forthcoming, but both sides insisted there had been no deals. In media interviews Nissan said it had received assurances that the British government was committed to a competitive auto industry, but there had been no detailed agreement on anything else. A government spokesman refused to concede any concessions had been negotiated. British politicians clamoured for more details.

Revise up
BMI Research said the news prompted it to revise up its forecasts that vehicle production and R&D will both remain buoyant in the U.K. after it leaves the E.U. The news meant –

  • A stronger conviction in our core view that that continuation of free trade will mean that investments are not diverted and production is not cut back past 2018
  • Lowering the likelihood of cutbacks in research and development

BMI Research said the deal showed the British government is seeking a free trade deal for the auto industry in general.

“While this is by no means a guarantee that the U.K. will actually secure tariff free access to the E.U. for the industry, it does show a resolute determination and prioritisation amongst negotiators to secure a free trade deal for the U.K.’s manufacturing industries. With this announcement from the government we anticipate an industry wide uptick in producer sentiment towards Brexit risks that should encourage other automakers to not cut investments or reduce spending as much as may have been planned,” BMI Research said.

Britain will start formal proceedings to leave the E.U. before the end of March. 

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