Nissan Still Eligible For U.K. Government Aid

Nissan Still Eligible For U.K. Government Aid.

Nissan Needs To Apply.

A British government grant is still up for grabs for Nissan of Japan despite its withdrawal of the plan to make the X-Trail SUV at its Sunderland plant, but it has been cut from 80 million pounds ($104 million) to £61 million.

The grant cut was announced in Parliament by Business Secretary Greg Clark, who said Nissan had applied for the reduced loan- business-secretary-gives-statement-on-nissan. Nissan said it has yet to decide whether to apply for the loan, ear-marked to accelerate its shift in Europe from diesels to electric and electric assisted vehicles and for skills training, and research and development.   

In a letter to workers at its Sunderland plant Monday, Nissan explained that it decided not to build the X-Trail in Britain as well as in Japan because the sales prospects for Europe were weakening, and EU regulations on toxic emissions were undermining sales of diesel powered cars and SUVs.

Diesel sales in Europe accounted for more than 50% of the market a couple of years ago, and have now sunk to just over 30%.

Uncertainty over Britain’s exit from the EU on March 29, 2019 was adding to the uncertainty, Nissan said. Manufacturers in Britain like Jaguar Land Rover, Ford, Toyota and Honda have been pleading with the government to make sure conditions after Brexit will allow uninhibited access to EU markets. The case for manufacturing in the UK has lessened since the Economic Partnership Agreement between Japan and the EU came into force on February 1. Producing cars and SUVs in the UK to avoid tariffs is no longer necessary for the Japanese.   

Nissan will now have to redesign the X-Trail to incorporate more frugal gasoline engines, or offer gasoline electric hybrid versions. Production of the big selling Nissan Qashqai and Nissan Juke will continue at the Sunderland plant, as will output of the electric Nissan Leaf, the Infiniti Q30 and QX30. The original plan called for spending the 80 million pounds in return for setting up the new X-Trail production, and retaining the Qashqai and Juke.

Nissan, part of the alliance with Renault of France and Mitsubishi Motors of Japan, has come under pressure since former CEO Carlos Ghosn was arrested in Japan and charged with hiding part of his compensation to avoid tax. Ghosn says he is innocent. The future of the alliance is now in the balance.

Renault owns 43% of Nissan, which has a non-voting 15% stake in Renault. France owns 15% of Renault.

---