Despite Brexit, Nissan Will Build New Car Model in Britain

Despite Brexit, Nissan Will Build New Car Model in Britain

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A worker on the production line of the Nissan plant in Sunderland, Britain. The Japanese car giant announced on Thursday that it would build a new car model at the plant, easing concerns about the effect of Britain’s exit from the European Union on the industry.

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Oli Scarff/Agence France-Presse — Getty Images

LONDON — The Japanese carmaker Nissan, one of Britain’s largest overseas employers, announced on Thursday that it would build a new car at its existing plant in Sunderland, giving Prime Minister Theresa May of Britain a considerable political gift.

Sunderland has been a symbolic flash point in Britain’s decision to leave European Union.

In the run-up to the vote, Nissan had threatened to stop investing in the plant, creating the potential for thousands of job losses in the area. But the economic uncertainty did not dissuade the residents of Sunderland from voting overwhelmingly to exit.

The Nissan deal will be closely dissected for early indications about how Ms. May will potentially navigate the thorny negotiations with major industries. Nissan acted after getting reassurances from Mrs. May that the company would be protected from any negative economic impact from the so-called Brexit.

Mrs. May called the announcement “fantastic news for the U.K.,” saying that Nissan was “at the heart of this country’s strong automotive industry,” which is almost entirely foreign-owned and ships more than half its exports to the European Union.

“This vote of confidence shows Britain is open for business and that we remain an outward-looking, world-leading nation,” Mrs. May said in a statement. “It is a recognition that the government is committed to creating and supporting the right conditions for the automotive industry so it continues to grow.”

Nissan’s chief executive, Carlos Ghosn, warned in September that the carmaker needed British guarantees before it would commit to further investment at its plant, which produces some 500,000 cars a year for the regional market. Britain’s exit from the European Union is likely to mean an end to duty-free participation in the European single market, potentially making it uncompetitive for Nissan to continue to invest here.

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Mr. Ghosn clearly got guarantees from the British government, but there were no details about what those might be. It is particularly complex because there is no way of knowing what kind of trade deal Britain might negotiate with the European Union over the next two or more years.

Mrs. May also benefited on Thursday from early figures showing that the British economy grew faster than expected in the three months after the referendum to leave the European Union on June 23.

Despite fears of an early recession, the economy expanded by 0.5 percent from July to September, down only 0.2 percent from the previous quarter. The figures were helped by the service sector, which represents 80 percent of the economy.

“The fundamentals of the U.K. economy are strong and today’s data show that the economy is resilient,” said Philip Hammond, the chancellor of the Exchequer.

Although the figures will be used as ammunition by those who favored the decision to leave the European Union and those who did not, they underline the largely postindustrial nature of the British economy. Still, the car industry is an important symbol of Britain’s ability to prosper in a highly competitive sector, which is why Nissan’s importance outweighs the size of its investment here.

Despite the risks of leaving the European Union, Sunderland voted by a surprisingly large margin in June for the British exit, known as Brexit; 61 percent favored quitting, despite the 7,000 Nissan workers there. The Sunderland vote, which came early in the counting, was taken as a strong indication that Britain would vote to leave. It ultimately did, by 52 percent to 48 percent, despite fears that the economy would suffer badly.

“Nissan’s decision follows the U.K. government’s commitment to ensure that the Sunderland plant remains competitive,” the company said in a statement. “As a result, Nissan will increase its investment in Sunderland, securing and sustaining the jobs of more than 7,000 workers.”

Mr. Ghosn, who met with Mrs. May this month, said on Thursday that “the support and assurances of the U.K. government enabled us to decide that the next generation Qashqai and X-Trail will be produced at Sunderland.” He then praised the workers there, saying that they “continue to make the plant a globally competitive powerhouse.”

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