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Nissan: Positive economy growth leads to future production of new models in the UK
With the third quarter GDP growth rate proving to be better than predicted at 0.5% (0.2% higher than estimated), Nissan has decided to remain in the UK, agreeing to invest further in its Sunderland manufacturing plant in North East England. Even though car manufacturing was down 1%, there have been signs of positivity for Nissan that has led to this decision. Exports for the manufacturer will become cheaper due to the falling exchange rate with the European Union possessing the UK motor industry’s biggest export market (57.3% of UK car exports are attributed to Europe).
Due to the concerns from the UK government, they have agreed to provide certain guarantees and assurances to ensure Nissan remains in the UK. Although these assurances are not clear, it is likely that they will certainly reduce the effect of Brexit for the Japanese car maker. It has been confirmed from both parties (the government & Nissan) that this deal did not include a ‘check book’, meaning it is understood the government did not prescribe a payout for the car giant to remain.
True intentions behind Nissan remain unclear, however in order for them to relocate; logistically it will have cost a lot of capital and time. The assurances it has secured may have been what Nissan was initially attempting to achieve in the place rather than ever planning on leaving the UK.
Nissan’s decision has led to the security of 7,000 jobs for people who currently work in the production plant in the North East making Nissan the largest employer in this region. A further announcement of the X-Trail SUV will lead to more jobs as the company plans to invest in a further production line on the site.
With the decision being closely watched by other car manufacturers in the same position, it remains to be seen what future decisions other automotive giants with UK production will take.
Full insight available on the MarketLine Analyst Insight section available to our subscribers.