Nissan commits to Sunderland as COVID-19 pauses UK car production

Nissan (7201.T) is temporarily pausing production at its Sunderland factory but has committed to the region long-term on the back of the trade deal between the UK and EU.

Nissan said in a statement on Thursday night that it would temporarily pause one of its two production lines at its Sunderland factory.

Two shifts will be skipped on Friday on line one, which produces LEAF and Qashqai cars. Line two, which produces Juke cars, will continue as normal.

READ MORE: COVID-19 and Brexit put spanner in works of UK car supply chains

The temporary pause is due to supply chain issues caused by the COVID-19 pandemic, a spokesperson said. A part needed for the wheels on Qashqai cars has been held up at a port. Production is expected to resume on Monday.

While production is stopping temporarily, Nissan overnight committed to retaining its manufacturing base in Sunderland over the long-term — a move that safeguards 6,000 jobs. Prime minister Boris Johnson on Friday morning said the decision was “a great vote of confidence in the UK.”

Nissan told outlets including the BBC that the Brexit deal struck between the UK and EU on Christmas Eve means the manufacturer has certainty about trading in the region.

READ MORE: £34bn Brexit VAT bill pushes companies to the brink

“The Brexit deal is positive for Nissan,” Nissan’s chief operating officer Ashwani Gupta told the BBC. “Being the largest automaker in the UK, we are taking this opportunity to redefine auto-making in the UK.”

Nissan plans to ramp up its presence in the UK and source more electric batteries here to comply with EU rules. Under the trade deal terms, 55% of a product must be made in the UK to qualify for zero tariffs and zero quota status.

Nissan currently produces 40kw batteries here in the UK for its electric vehicles but the more powerful 62kw batteries are sourced from America. Under plans being discussed, production would move to the UK. It was not clear whether this would create jobs.

WATCH: Nissan says Brexit deal is 'positive' - and gives carmaker a 'competitive advantage'

READ MORE: 'Unprecedented' fall in EU car market as COVID-19 sparks biggest decline on record

“This is a great vote of confidence in the UK and fantastic news for the brilliant Nissan workforce in Sunderland and electric vehicle manufacturing in this country,” Johnson tweeted.

Kwasi Kwarteng, the UK’s business secretary, hailed the announcement as “a huge vote of confidence in our economy” and said the move “represents a genuine belief in Britain.”

Last year Nissan warned it could pull out of the UK if Britain failed to secure a trade deal with the EU. Gupta said in November that Nissan’s UK business would be unsustainable without a deal.

Nissan’s Sunderland factory is the biggest car manufacturing plant in the UK and the company is a cornerstone of the region’s economy. The company’s importance was spotlighted when the government struck a secret deal with Nissan shortly after the Brexit vote in 2016. The government promised Nissan would not be “adversely affected” by Brexit and offered support worth up to £80m. The promised funding never materialised as Nissan abandoned the plans that were linked to the financial assistance.

WATCH: What are the risks of investing in cryptocurrency?