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Nissan scraps plan to make X-Trail SUV in UK factory

London

NISSAN Motor Co abandoned a plan to make the X-Trail sport utility vehicle at a factory in northern Britain, saying uncertainty over Brexit isn't helping on future investment.

"We appreciate this will be disappointing for our UK team and partners," Nissan Europe chairman Gianluca de Ficchy said in a statement on Sunday.

"While we have taken this decision for business reasons, the continued uncertainty around the UK's future relationship with the EU is not helping companies like ours to plan for the future."

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Nissan's decision is another blow to the British car industry, which reported a 46 per cent drop in investment last year as carmakers delayed decisions on upgrading machinery and factories amid mounting concern about the impact of a hard Brexit.

Spending was £589 million (S$1.05 billion), the lowest since the global financial crisis, the Society of Motor Manufacturers said in a statement on Thursday.

The Japanese carmaker will continue to produce the X-Trail in Kyushu. Other vehicles planned for Nissan's Sunderland factory - including the next generation Juke and Qashqai - are unaffected by the decision, the company said.

The X-Trail model was previously planned for production in the UK as announced in 2016 after the company and UK government worked out an agreement for future investment. "Support and assurances" from the UK government persuaded Nissan to continue investing in the site, the company said in October 2016.

Nissan's statement didn't give a reason for the decision, but Sky News reported earlier that the management cited emissions regulations and reduced sales forecasts.

Sky News reported that a letter from the management to Sunderland's 7,000 factory staff said that the announcement would be "interepreted by a lot of people as a decision related to Brexit".

Current production in Sunderland includes the Nissan Leaf, Europe's best-selling electric car, which reached a record 46,989 units last year, up 177 per cent from the previous year, according to the company. BLOOMBERG