Yahoo Finance Renault may ride to the rescue for Nissan's Sunderland plant
Workers furloughed from their jobs at Nissan’s huge Sunderland plant have been watching in horror as global car sales collapse during the coronavirus pandemic.
But they got a rare piece of good news on Thursday when it emerged that Renault could move production of two models from Spain to Sunderland plant, to be made alongside with Nissan’s Qashqai and Juke vehicles.
Renault and Nissan work together under a strategic global alliance that has frayed in recent years, but any deal could help secure the future of the beleaguered Sunderland plant and provide an example to other car makers battling the twin threats of coronavirus and Brexit.
"If it does happen then that is probably the most positive piece of news we have had about Nissan in Sunderland in a long time,” says Professor David Bailey at the University of Birmingham.
Reports of the talks come at a time of crisis for the car industry. The coronavirus lockdown and closure of car showrooms has triggered a 97pc slump in sales of new vehicles in the UK to just 4,321 last month - levels not seen since the end of the Second World War.
It adds to huge long-term pressures on the industry from the shift to electric cars - which are less profitable, the backlash against diesel cars and the US-China trade wars. Carmakers are forming alliances to try to cope with the shared challenges, with Fiat-Chrysler and PSA Group in the middle of a $50bn (£41bn) merger to create the world’s fourth-largest car maker.
Nissan has suffered particularly badly and is also still reeling from the ongoing scandal that has seen former chairman Carlos Ghosn flee to Lebanon after being arrested in Japan over claims of financial misconduct. He has alleged he is the victim of a plot to prevent a deeper merger between Nissan and its French partner Renault.
The potential shift of some Renault production to Sunderland is believed to be part of a wider restructuring plan under which Nissan is trying to cut $2.8bn in costs after three years of tumbling profits.
Nissan would also close its van plant in Barcelona, with production of the Navara pick-up truck sent to South Africa and of the next e-NV200 van to Renault’s plant in Maubeuge, northern France, the Financial Times reported.
Shifting Renault production to the UK in return could help Sunderland, which employs 6,000 people, remain viable at a time when manufacturers are braced for the prospect of new tariffs after Brexit.
The model could be repeated elsewhere including at Vauxhall’s Ellesmere Port, where workers are waiting to find out whether it will be used to build the next Astra model, amid repeated warnings from PSA boss Carlos Tavares that its willingness to invest in the plant will depend on a post-Brexit trade deal.
“In scenario planning to deal with Brexit, one option to try to keep their plants in the UK going is a platform-sharing approach where you can use different models and brands on the same production line,” says Bailey.
Any plant-sharing deal would appear to tie Nissan to the UK despite any Brexit deal being a long way off and its previous insistence that its “entire business in the UK and Europe is not sustainable in the event of WTO tariffs”.
In February, Nissan denied reports that it had drawn up contingency plans to cope with any export tariffs by doubling down on the UK, beefing up its Sunderland plant in an attempt to take as much as 20pc of the UK market.
It is not yet clear where any Renault models made in Sunderland would be destined for. Output in Sunderland has already fallen from more than half a million vehicles to about 350,000 and optimism over the potential plant-sharing deal is not unbridled.
“It might safeguard the plant but not necessarily all the jobs,” Bailey adds. “I can’t see them getting back to those heights.”
