AUTONEWS

The fall of Japanese car giant Nissan in Europe - is it the next largest British factory

The struggling Japanese car manufacturer Nissan has announced in the past month that it will lay off a tenth of its workforce in Europe and abandon the construction of a parts factory in the UK.

As RTS reminds us, a few weeks ago, the Japanese car manufacturer Nissan announced the layoff of 900 workers in Europe, as part of its large-scale consolidation and revitalization plan called "Re: Nissan".

These days, Japanese media are writing that it is also abandoning the construction of a new parts factory in the UK.

The aforementioned layoff of ten percent of Nissan's workforce in Europe mainly concerns office and warehouse workers, primarily in Spain and Scandinavia. The company, however, has abandoned the construction of a powertrain factory for electric cars, which was supposed to produce up to 340,000 units and for which it had already received a subsidy of 12 million pounds from the government in London.

The reason is primarily the drastic decline in sales of Nissan's electric cars in Europe. In fiscal 2025, the Aria model recorded a decline of as much as 44 percent. Sales of the once popular Leaf, albeit largely due to the gap created before the introduction of the latest version of the car, have almost completely died out - only 87 copies were delivered to European customers in the last fiscal year.

Agonizing crisis...The Yokohama-based corporation has been going through a serious crisis in recent years caused by a decline in sales in China and elsewhere, and a loss of reputation due to the scandal surrounding the dismissal and arrest of former CEO Carlos Ghosn.

The company is burdened by excessive production capacities, unused space, equipment and personnel. Because of this, it has already decided to close as many as seven factories worldwide for assembling entire vehicles and lay off 20,000 workers.

The first concerns in the British media that the Japanese company's crisis would affect the island appeared back in 2024, after Nissan announced its general plan to reduce its workforce by 9,000 people worldwide - there were fears for the fate of the Sunderland factory. It is the largest plant in the UK automotive industry, employing 6,000 workers. Despite having a production capacity of 600,000 vehicles per year, it rolled off its assembly lines in 2024, only 282,000.

A little later, in mid-2025, news appeared in the British press about a smaller reduction in the number of employees in Sunderland of about 250 people.

Although Nissan's plan to lay off its workforce has since been expanded to as many as 20,000 people, over the past year the media in Japan has been talking exclusively about factory closures in Asia, Africa and Latin America.

Could the UK's largest car factory also be closed? However, last month Nissan announced that it would lay off 900 workers in Europe, representing 10% of its workforce in the Old Continent. Sunderland will avoid these cuts, where rationalisation will be carried out by stopping one of its two production lines, but without reducing the workforce.

In this regard, Nissan is expected to offer the use of the abandoned production line to another foreign corporation, probably the Chinese company Chery, which is booming and has excellent production results in the UK.

It is also possible that cars will be produced for the needs of the Chinese manufacturer Dongfeng, in order to use the idle production line.

It should be noted here that British media are writing that the Sunderland factory probably avoided the cuts carried out by the new Nissan management worldwide thanks to the fact that the government in London had previously given the Japanese company a loan. During the reign of the disheveled Prime Minister Boris Johnson, it granted it a generous subsidy of about £100 million in 2022. Officially to help set up production of another electric model in Sunderland, or, unofficially, to persuade it not to leave the UK after its exit from the EU.

And indeed, at the very end of last year, Nissan began production of a new version of the electric car "Leaf" in Sunderland, which required a total investment of £450 million.

The problem, however, is that Nissan's abandonment of building a power unit factory now hints at its reduced engagement in the European market in the future, which could ultimately affect 6,000 workers in Sunderland. Especially when you consider the economic friction between London and Brussels.

Namely, a new wave of anxiety about Sunderland hit the island's seventh power in March this year. At that time, local Nissan management in Britain, according to the Guardian newspaper, informed the hosts that the plant in that city could be locked down if the United Kingdom is not included in the European Union's "Made in Europe" scheme. This scheme is in the conceptual stage and should be adopted soon.

It provides for subsidies from Brussels to accelerate the development of electric vehicles manufactured in the EU and limits the purchase of cars by companies and state authorities of member states only to those that are beneficiaries of these benefits, that is, those that are assembled on EU territory. Since the United Kingdom is no longer in the EU, depending on the specific content that is adopted, the car industry factories on British soil could be excluded not only from major public procurement of cars in the EU, but also from the supply chain of parts, which would make the operation of the Nissan plant in Sunderland unprofitable.

Glorious past and hope for a better future..."Nissan reached the peak of its success in the United Kingdom during the second half of the seventies, when it sold up to one hundred thousand cars a year under the Datsun brand.

It built the Sunderland factory in the mid-eighties and currently produces three models there: the Leaf, Qashqai and Juke.

The company expects that the restructuring will soon bear its first major fruits - Nissan believes that it will increase revenues by just over eight percent this fiscal year, and operating profit, thanks to major cuts, by as much as three times, thus returning to profit after three years of losses.