A top Nissan executive said a dwindling base of local suppliers could reduce the competitiveness of Sunderland as it transitions to building electric cars.
LONDON -- Nissan has called on the British government to do more to attract automotive suppliers to the country as it worries about falling competitiveness of its manufacturing site in Sunderland, England.
"The UK is becoming more and more challenging as a manufacturing footprint,” Nissan Chief Operating Officer Ashwani Gupta told journalists at an event in London on Monday held to highlight a new alliance agreement with partner Renault.
Nissan’s concern is that the UK’s shrinking automotive industry will make it harder to source parts locally as the automaker shifts to building more electric vehicles in the country.
"We are not attracting suppliers,” Gupta said. "If you don’t have a big automotive industry, what is the benefit for suppliers to localize raw materials and so on?”
There were 775,014 vehicles built in the UK in 2022, a 10 percent decline from 2021 and the lowest figure since 1956. The 2022 total was 41 percent lower than in 2019, when more than 1.3 million cars were built, according to the Society of Motor Manufacturers and Traders (SMMT), the British auto lobbying group.
Nissan is concerned that the Sunderland factory, its sole European facility since closing its plant in Barcelona plant in 2021, will struggle to remain cost effective.
"Sunderland is one of the best plants in the world in terms of competitiveness,” Gupta said. "Whether it’s going to stay competitive is a question to be answered.”
Local content seen as key
The biggest threat is the reduction of "competitive localization,” in which Nissan would not be able to source enough parts locally to ensure it stays profitable. "It’s challenging to even achieve 40 percent localization,” Gupta said.
The UK needs more suppliers of battery materials, for example, he said. "Just making a plastic box is not for me industrialization,” Gupta added.
Nissan is calling for a government strategy to persuade more suppliers to locate in the UK, as the country tries to rebuild its automotive industry amid the challenges of the shift to electrification and its exit from the European Union.
"We want to attract more suppliers to make it more competitive, and this where we need the support of the government,” Gupta said.
High localization rates are also critical to avoiding potential export tariffs.
Under rules of origin in free trade agreements, if too much of a car’s value is sourced outside the UK, it can incur additional taxes.
Gupta said that Nissan would be able to meet the EU’s tighter local content rules as part of the Brexit trade deal, but it wants to go further. "Rules of origin we will manage, but we want to be competitive,” he said.