The Department for Business, Energy and Industrial Strategy was prepared to offer Japanese car manufacturer Nissan £80m of support to build its new X-Trail model at the firm’s Sunderland plant, it has been revealed.
The department revealed the package of support it offered Nissan after the firm announced yesterday that it would reverse its pledge to build the car at the plant.
Nissan announced in October 2016 that it would build the next generation of X-Trail vehicles in Sunderland, alongside existing Qashqai, Leaf and Juke models. It made the pledge, which had been expeced to create an additional 741 UK jobs, after business secretary Greg Clark set out commitments of support for the firm after Brexit.
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In the letter to then Nissan chief executive Carlos Ghosn, Clark said the government would provide “a package of support in areas such as skills, R&D and innovation” that could be worth up to £80m.
“You will understand of course that this figure will be subject to business cases being developed, which are independently assessed, and the usual processes of due diligence,” the letter stated. “It is contingent too on a positive decision by the Nissan board to allocate production of the Qashqai and X-Trail models to the Sunderland plant.
“We recognise that the UK has a stake, and we are backing your continued success in Sunderland to the hilt.”
The figure was later revised down to £61m following a review by an independent advisory committee. According to BEIS, the manufacturer has so far received £2.6m of that funding and will have to reapply for the remaining £58.4m.
Clark said in the 2016 letter that government had already been able to confirm £22m of support for the foundry at Sunderland to become a European development centre for the firm’s alliance with fellow carmakers Renault and Mitsubishi.
The letter also acknowledged the impact of Brexit on the company’s plans, and pledged that it would be “a critical priority of our negotiation to support UK car manufacturers and ensure that their ability to export to and from the EU is not adversely affected by the UK's future relationship with the EU”.
Clark said the government would “vigorously pursue continued access to the European market as an objective in future negotiations”, adding that: “In any circumstances, the government will ensure that the UK continues to be one of the most competitive locations for automotive and other advanced manufacturing, within Europe and globally, including sites such as Sunderland which are key to the economy of the North East of England.”
Nissan said yesterday that its decision not to produce the X-Trail at the plant was for business reasons, but added that “the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future”.
In response, Clark said the decisrepresented “a blow to the sector and the region, as this was to be a further significant expansion of the site and the workforce”, but he highlighted that no jobs will be lost.
“[Nissan] have reiterated today their commitment to the UK by continuing to manufacture in Sunderland the current Qashqai, Leaf and Juke models and the new Qashqai model from 2020.
“The UK automotive industry is a vital sector for the British economy which draws on our combination of rich automotive heritage and cutting edge innovation. Its role in providing high skilled well paid jobs, innovative R&D and investment is why we are determined to build on these strengths to make the UK a leader in the next generation of autonomous and electric vehicles through the automotive sector deal, as part of our modern industrial strategy.”