How Nissan Sunderland's future hinges on Chery contract manufacturing and new models
To address low-capacity utilisation, Nissan plans to consolidate its production onto one line, hand the other to Chery from 2028, and add a new model, the Kicks, with a £170m investment
Nissan’s Sunderland factory can, in theory, make up to 600,000 units a year, spread across two assembly lines; it has never made that volume although it made just over 500,000 vehicles in each 2012, 2013, 2014 and 2016. However, production now is running at well below 300,000 with little sign of this number actually being reached at any time in the near future, at least not with Nissan models alone.
Consolidating production
With projections for the newly launched Leaf EV and the imminent Juke EV, along with the current Qashqai, all well below initial expectations, Nissan has reportedly been telling suppliers to assume a medium-term annual volume of c160,000 a year, with some modest headroom above that. This in turn has led Nissan to plan consolidation of all production onto one line, Line 2, which can assemble both EVs and hybrid models. Keeping two assembly lines operating for less than 300,000 units a year is barely economic, and for less than 200,000, two lines are not sustainable. This consolidation should be complete in the summer of 2027 after the summer shutdown.
It is also worth noting that one of the consequences of the reduced volumes for Nissan vehicles is that plans by AESC-Envision to make batteries for 300,000 or more EVs in Sunderland have been put on hold for now, and the scale of investment in the battery plant there will be much less than originally envisaged. This will in turn have a knock-on impact on suppliers’ investment plans further back along the battery supply chain, limiting’s the UK’s ability to build a complete EV battery supply chain.
Local suppliers are reportedly now receiving RFQs from Chery and all the indications are that kit assembly will begin on Line 1 in early 2028, with a rapid increase in local sourcing thereafter
Chery vehicle production in the pipeline
Once the consolidation onto Line 2 has taken place and all being well with current negotiations, Line 1 would be re-allocated to make Chery models. Nissan and Chery have been negotiating for this for some time although the deal has yet to be inked; a non-binding memorandum of understanding has been signed, and industry insiders suggest that negotiations are proceeding well. The arrangement will be one of contract manufacturing by Nissan for Chery, and assembly line workers will continue to be employed by Nissan.
Local suppliers are reportedly now receiving RFQs from Chery and all the indications are that kit assembly will begin on Line 1 in early 2028, with a rapid increase in local sourcing thereafter. Initially Chery production would be of just right-hand-drive models for the UK, but Chery will add left-hand drive vehicles once local supply chains, including some from the EU, can be operationalised.
The likelihood is that the first Chery model to come off line 1 would be an Omoda, with Jaecoos expected to follow. Production of models from other Chery brands, such as Lepas or even the new Freelander 8, cannot be ruled out in the long term.
The actual timing for the Chery ramp-up will be in part determined by the UK’s negotiations with the EU regarding the Industry Accelerator Act which could result in UK-made EVs facing additional tariffs, or non-tariff barriers, when sold inside the EU. Details on the UK-EU negotiations between the UK and the EU, regarding the IAA’s application to the UK and related changes to Rules of Origin requirements for existing EVs under the post-Brexit free trade deal, the UK-EU TCA, have also to be agreed, hopefully by the end of 2026.
New Nissan model to boost utilisation at Sunderland
In parallel with all of the above, and recognising that even a successful Chery deal will still mean under-utilisation at Sunderland, Nissan has decided to add another vehicle to its own manufacturing line-up in the UK. In September it announced that it would – subject to a positive outcome on EU negotiations and no doubt some further UK government support – invest UK£170m in Sunderland to make a European version of the Kicks compact crossover. This will effectively replace the ICE/hybrid Juke, which will stop production in Sunderland in mid-2027. The Kicks is a similarly sized vehicle but with a hybrid powertrain which will comply with new EU emissions rules; the current Juke will not meet these emission rules.
As with the Chery deal, the Kicks programme is not 100% confirmed but suppliers are understood to be in price and volume negotiations with Nissan purchasing executives. The timeline is expected to see initial product in mid-2028 with a provisional volume target of 40-50,000 vehicles a year, i.e. similar to the revised volumes now planned for the Juke EV. Originally the Leaf and Juke EVs were planned to be c80,000 a year each but now they are planned to be half that. Initial Kicks production is expected to from imported kits, but local production of a restyled front bumper and grille will be required as well.
Existing Nissan suppliers throughout the UK will be looking to the Kicks and expected Chery models for new business to maintain their current operations, never mind growing them once again
Securing Nissan Sunderland’s future
Nissan also indicated when it made this announcement that it was expecting some amendments to the UK government’s ZEV mandate and targets, indicating that without this the Kicks programme might not go ahead. The UK government will not, however, wish to risk the fall out if the programme were cancelled. The UK has received some other good automotive news with investment by McLaren (insert link) and the significant investment in Crewe for the new Bentley Torcal (insert link). It will want to ensure that the Nissan investment and commitment to the Kicks proceed without a hitch. Certainly, it will not want to risk the loss of supply chain jobs which will surely follow if reduced Nissan production is not boosted with the Kicks and indeed the Chery models. Existing Nissan suppliers throughout the UK will be looking to the Kicks and expected Chery models for new business to maintain their current operations, never mind growing them once again.
Finally, it is worth noting that back in June this year, Reuters had reported that Nissan and the UK government were in discussion over a support package for Sunderland. Details have not emerged, nor has a final agreement been confirmed but a mix of grants, tax breaks or even subsidies for energy could well be agreed. 6,000 jobs at the Sunderland plant and at least the same again throughout the supply chain are dependent on UK retaining this factory. The stakes are indeed high and if the UK is to have a long enter future in manufacturing in general, the Nissan plant and supply chain will be essential.
