Nissan Announces New Mid-Size Model and 24-Hour Production for Sunderland, UK Plant

Nissan has announced that it is planning to make further investment at its Sunderland (United Kingdom) facility which will increase production to record levels. According to a statement released this morning (10 April), coinciding with a visit by UK Prime Minister David Cameron to Nissan's headquarters in Japan, the company is to spend GBP127 million (USD201.6 million) to build a "new medium hatchback" from 2014. The investment will be joined by an offer of a further GBP8.2-million-worth of support from the UK government's Regional Growth Fund (RGF). This will create a further 225 jobs at the plant, with an additional 900 staff expected to be required at its component suppliers in the country. Nissan plans for the new model to be built at a rate of around 80,000 units per annum (upa).

This is the latest investment that has been announced during the past couple of years. Following on from plans to build the Leaf electric vehicle (EV) and a battery plant at the site (see United Kingdom: 18 March 2010: Nissan, Ford to Make Low-Emission Investment in U.K.), it also announced that it would be investing in the manufacture of the next generation of its Qashqai sport utility vehicle (SUV) model, which has underpinned the growth of the site in recent times (see United Kingdom: 9 June 2011: BMW to Invest GBP500 Mil. in Next-Generation Mini Production; Nissan Confirms Next Qashqai to Be Built in UK). Last month it was also announced that the company would build a new premium B-segment hatchback model at Sunderland based on the Invitation concept displayed at the Geneva Motor Show (Switzerland; see United Kingdom: 6 March 2012: Nissan's UK Plant Wins Contract for New B-Segment Model). With the combination of these three models plus the new hatchback and the increasingly popular SUV-B Juke that is also built at the site, Nissan is anticipating that total production will reach over 550,000 units per annum (upa). This would not only smash the production record achieved in 2011 of 480,485 units, but also require the implementation of an additional shift, and will see will both production lines operating around the clock for the first time in the plant's history.

Outlook and Implications

Nissan has said that it will announce details such as pricing, engine line-up and equipment levels of the as-yet-unnamed hatchback closer to its launch. However, IHS expects the model to be built at the site will be based on the second-generation Tiida that was launched on other markets late last year. This will mark a further step of the plant's production towards what can be considered mainstream models. Following the exit of the Micra in 2010, the site has devoted its efforts to SUVs and the Note multi-purpose vehicles (MPVs) which are niche offerings, and allow a more premium price tag and greater profitability as a result. The move is a curious one considering that demand for its previous C-segment hatchback model, the Almera, contracted to the extent that it was dropped altogether in many European markets at the end of 2006, and as a replacement the Tiida sedan was imported from outside the region to only certain markets in limited numbers. Nonetheless, a re-entry into this highly competitive regional segment, which includes the Volkswagen (VW) Golf, is likely to be seen as a way towards achieving its sales targets for the region under the Power88 plan. During the course of this plan, it is anticipating that it will take 5% of the market by 2014, from around 3% in 2011, as well as eventually becoming the biggest selling Asian car brand. However, IHS Automotive anticipates that its sales in Europe will remain at this level. Production at Sunderland will also reduce the logistical and currency translation impact of shipping such a vehicle from Mexico or Japan. The model may also go some way towards offsetting the risks related to the Leaf EV. The market for EVs is yet to be proven and demand will be low for the vehicle that will begin being built at Sunderland in 2013. IHS Automotive expects the new hatchback to be built on the B platform which is shared with the Leaf and could share many of the components used to build this vehicle and in turn used to balance demand levels and gain the best profitability levels. For now though, it is a case of wait and see how closely these vehicle will be related. Nonetheless, the combination of these five models being produced at the site will consolidate Sunderland's position as the largest vehicle manufacturing site in the UK as well as one of Nissan's largest worldwide.