Nissan has decided not to
build its latest sports
utility vehicle, the
X-Trail, at its British plant
in Sunderland.
The decision, which reverses
a pledge the Japanese carmaker
made in 2016, couldn't come
at a worse time for the UK car
industry, which is facing
falling production levels
and is busy preparing for the
possible impact of Brexit.
But what's behind Nissan's move?
Critics of Brexit have been
quick to leap on the timing,
suggesting that
Nissan pulled out
of the model because of
worries about leaving
the EU, which is the plant's
largest export market.
In truth, it's slightly
more complicated than that.
Nissan in Europe is
suffering from falling sales
and poor margins, and
corporate headquarters in Japan
is keen to prioritise investment
into more profitable markets.
What's more, the vehicle was
expected to be largely diesel.
That's a market
that's in decline
sharply across all of Europe.
And with production slated to
start in about two years' time
and running until almost
the end of the decade,
Nissan felt it wasn't able to
guarantee sufficient demand
for the vehicle later into
the life of the programme.
There are also new
emissions rules
that come into force
in Europe which
increase the cost of
engineering the car.
That meant the company was
also looking for other ways
to cut costs of the project.
The X-Trail is
already made in Japan,
so to set up an
additional line in Britain
making the car would have cost
the company millions of pounds
that it will now save.
But for a plant that exports
more than half its cars
to Europe and ships in
components from the continent,
the trading relationship
with the EU in future
was always going to
be a critical factor.
The prospect of tariffs
and border checks
on its cars in future will not
have helped Nissan's decision.
But from Brexit to diesel
to emissions rules,
Nissan's decision
does show one thing,
conditions in the
global car industry
can sometimes
change very quickly.
And when that happens, companies
need to adapt to survive.
