Nissan chief warns No-deal Brexit could mean car firm's European business model ‘will not be sustainable’

Ten per cent tariffs after a no-deal Brexit would mean Nissan’s European business model would ‘not be sustainable,’ the firm’s European chairman has warned.

Thursday, 10th October 2019, 2:28 pm
Updated Thursday, 10th October 2019, 4:43 pm

And a Wearside MP has said No-deal ‘isn’t getting Brexit done. It is getting done over by Brexit’.

Local, national and international media toured the car giant’s Sunderland plant today, Thursday, October 10, as it geared up to begin production of the new Juke, before a round-table press conference with Gianluca de Ficchy and senior managers from the factory.

Mr de Ficchy said the plant was well-prepared for any Brexit scenario from a practical point of view and played down fears over supply of parts, even in the event of No-deal.Nissan was committed to Sunderland, he said, paying tribute to the Wearside workforce, but the firm was desperate for clarity on what form the future relationship between the UK and EU would take.

A new Juke on the production line

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“We are not able to manage the uncertainty relating to the current Brexit discussion,” he said.

"How can you take a decision based upon a scenario you do not know?"

He pointed out the the new Juke had been in the pipeline for four years, and other new models would need the same run-up: “We are working to define what will be the future location of products and due to the uncertainty that we have today, we cannot take any decision.

“If a No-deal scenario means a sudden application of the WTO (World Trade Organisation) tariffs, we know that in that case our business model won’t be sustainable in the future.”

Gianluca de Ficchy

The new Juke was a car 'conceived for the European market', with 70 per cent of production to be exported to the EU: “Our industry is an industry that works with lower margins and if we are in a situation in which tomorrow, we will have to apply 10 per cent export duties to 70 per cent of our production, the entire business model of Nissan in Europe will be in jeopardy.”

The outcome of a no-deal Brexit was uncertain – extra costs could be off-set by other tariffs on imports and a falling pound could increase the firm’s share of the UK market at the expense of competitors, said Mr de Ficchy.

But he warned: “That WTO scenario, associated to a No-deal scenario, is not sustainable for us. That situation is the only one we cannot afford. We don’t see any possibility to offset, through cost reduction or reorganisation, the impact that those tariffs may have.”

The firm was still committed to Sunderland and its 6,000-plus workforce, he said: “The base assumption we are still taking today is to stay in this plant. This plant has strong assets, which are our employees, and this plant has been able to produce more than 10million quality vehicles.

The Nissan production line

“That is the reason why, despite the uncertainty, we have continued remaining here.

"If you have to pay 10 per cent in export duty, that will generate a significant cost increase on vehicles that we have to face and we have competitors in Europe who will not be affected.

“Ten per cent additional cost does represent ten per cent additional loss.

"The problem is the overall European activities cannot support an additional ten per cent cost on the vehicles that are exported. The first thing we do need to have is clarity.”

Bridget Phillipson MP

The UK and EU governments could agree not to apply tariffs, he said.

Asked if closing the Sunderland plant was an option, he replied: “We are looking at all possible solutions but we have still not identified how we will react. The only thing I can tell you is any plant decision is not a straightforward decision. It takes time.

“I cannot give a precise answer because I do not have a precise answer. Our assumption is continuing the plant but every decision we have to take, we have to carefully analyse it.”

Sunderland workers were 'the most relevant asset we have and we have to preserve for the future.

“I know the workforce is concerned and we are concerned. That is why we are here, to express our concern and our willingness to find a solution for the future.”

He said the decision to end night shifts at the plant was not linked to Brexit but was aimed at optimising the two production lines for the models built there.

Houghton and Sunderland South Mp Bridget Phillipson said Mr de Ficchy’s comments proved the need for a second Brexit referendum.

“The last 24 hours has underlined the seriousness of the current situation for Nissan on Wearside and the automotive sector as a whole,” she said.

“First came the news that night shifts would go. Whilst thankfully there are no job losses, some 3,000 people will in effect be receiving a pay cut.

“Then came the announcement that the new Juke will be rolling off the production lines from Monday. This should be a moment of pride and celebration for our region.

“But today also saw the stark warning from Nissan’s Europe Chairman Gianluca de Ficchy. He was clear that Nissan created a plant in Sunderland ‘to serve European markets,’ that No Deal would put their entire business model ‘in jeopardy’ and that it ‘won’t be sustainable’.

“Johnson said No Deal won’t be ‘anything like as bad as you say’ in reference to Nissan – the company disagrees. This isn’t getting Brexit done. It is getting done over by Brexit.

“We must end the chaos, not end car making. Get rid of uncertainty not manufacturing jobs. It’s time to trust the people, not Boris Johnson, to solve the Brexit crisis by having the final say through a People’s Vote.”