Weekly News Review | 31October 2016 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

Calling Ghosn’s bluff

Nissan has announced, following its Executive Committee meeting, that it will produce the next Qashqai and will add production of the next X-Trail model at its Sunderland plant in the UK. This follows a tense few months of post-Brexit discussions between the UK and the automaker, which will continue to invest in the region, securing and sustaining more than 7,000 jobs at the plant. The news broke late last week, with a statement from CEO Carlos Ghosn confirming future investment. “The support and assurances of the UK government enabled us to decide that the next-generation Qashqai and X-Trail will be produced at Sunderland,” he said, welcoming Prime Minister Theresa May’s “commitment to the automotive industry in Britain and to the development of an overall industrial strategy.” Finally, the relationship between the UK and Nissan is back on track, although it seems rather strange to me that the Japanese powerhouse’s aggressive approach has become pacified so easily. Did the UK call Ghosn’s bluff?

Nissan has been at the forefront of post-Brexit arguments with Britain for some time now, threatening to curb its investments if May’s negotiations with the European Union impede the carmaker’s profits. This has put the Northern Powerhouse’s future in doubt, which has seen magnificent growth from the automotive industry, providing thousands of jobs not just in Nissan’s Sunderland plant, but other automakers in the region such as Jaguar Land Rover, with manufacturing plants in Solihull, Halewood and Birmingham. At the Paris Motor Show, Ghosn warned that if European trade tariffs were introduced, he would seek compensation for Nissan, whilst cutting back on investment to balance the books. However, the CEO has swiftly remoulded his position, stating that he is “confident the government will continue to ensure the UK remains a competitive place to do business.” This could be due to the possibility of free movement of EU workers in the automotive industry or, better yet, a guarantee that there will be a free-trade deal. Although it is very likely that the UK has assured Nissan that, though it will not be exploited, it will provide a ‘sweetheart deal’ payment in the event of post-Brexit difficulties. Though this may be the case, would Nissan really be prepared to up and leave the Sunderland plant so quickly? The Renault-Nissan Alliance has spare capacity in and around Europe, but it sounds like an extremely expensive and time-consuming process to me.

The UK is stuck in a time of uncertainty, so it is very positive to see that we are making progress, albeit rather slow. However, the next step is to come to an agreement with other global OEMs, who will be lining up for a similar deal which, if it involves a parachute payment, could be extremely costly for the UK in the long run. Only time will tell.

Alex Kreetzer

Alex Kreetzer - News Editor

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