Nissan invests £250m in Sunderland

Sunderland will soon become the first factory in the UK to produce 500,000 cars in a year

Nissan says it is investing £250m in Sunderland to make a small luxury car, creating "hundreds of jobs" in the UK.

"The Sunderland factory is very competitive," said Nissan's chief performance officer Colin Dodge.

The Infiniti model was penned by Nissan's design team in London and engineered at its technical centre in Bedfordshire.

Their brief was to appeal to buyers in Europe, where the marque's sales are weak.

Business Secretary Vince Cable visited the Sunderland plant on Wednesday for the investment announcement.

"Today's news is a strong endorsement of the quality of Britain's car industry, which is creating jobs, taking on apprentices and contributing to building a stronger economy," he said.

"The auto sector is living up to being one of the great success stories of our industrial strategy and a testimony to government and private sector working together in close partnership."

'Pivotal car'

Mr Dodge said it was too early to be specific about how many jobs would be created as a result of the fresh investment.

It was suggested, however, that it could be about 280 directly at the factory, with a further 700 or so created with suppliers.

However, to make space for the Infiniti, a previously announced investment of £127m to build a hatchback, involving some 125 jobs, will now be moved from Sunderland to another Nissan factory in Europe, for instance in Spain or Russia, an Infiniti spokesman said.

The Infiniti investment will be made during the next two years and the new Infiniti will start rolling off the assembly line in 2015, Mr Dodge said.

The new car will be based on the Infiniti Ethera concept car, first shown in March 2011

Nissan said it would produce up to 60,000 Infiniti cars per year.

The new car has not yet been named, beyond an announcement that it will be called something starting with Q followed by a digit and ending with 0, but it will be based on the Ethera concept vehicle that was displayed at the Geneva motor show in 2011.

"It is a pivotal car for Europe," Mr Dodge said.

Ambitious target

Infiniti has made little headway since it was first launched in Europe in 2008 with a series of large, thirsty cars with powerful V6 and V8 petrol engines.

"The Infiniti brand has been very American-centric for years," Mr Dodge said, "but the new, smaller model is the size of car for Europe rather than for the US."

Infiniti has set itself an ambitious sales target in Europe of 100,000 cars by 2016, compared with 16,700 cars sold in 2011.

Nissan executive Colin Dodge used to work in Sunderland so he is delighted to invest there

Between a third and half the sales of the new Infiniti are expected to come in Europe, said Mr Dodge.

The car will be the first Infiniti to be offered with a diesel engine, an option seen as crucial to win over European drivers, Mr Dodge said, though he declined to reveal further details about the engine options for the car.

The Ethera concept was a petrol-electric hybrid with a 2.5-litre four-cylinder engine. Nissan is developing engines jointly with Mercedes-owner Daimler, it works closely with alliance partner Renault, and in March this year it unveiled a high performance petrol-electric hybrid model, the Emergenc-e, that will use a three-cylinder petrol engine made by Hethel, Norfolk-based Lotus.

Efficient factory

Sunderland was awarded the model thanks to its reputation for efficiency, both in terms of quality and cost as well as ability to deliver, said Mr Dodge, who worked at the plant from 1984 until 2007 before he was promoted and moved to the Nissan headquarters in Japan.

The Nissan factory has earned a reputation for efficiency

Nissan used to claim that its Sunderland plant, which currently employs more than 6,000 people, was the most efficient car factory in Europe, though these days it tends not to mention this.

"But it is," said Mr Dodge. "We just don't keep chest-beating about it year in, year out."

Nissan said Sunderland is on schedule to become the first car factory in the UK to have produced more than 500,000 cars in one calendar year. "Even during British Leyland times, they didn't do that," said Mr Bolt.

Global production

The decision to produce the new Infiniti outside Japan was based on a number of factors.

"Historically, we've made Infiniti in Japan," said Mr Dodge, though in recent years, he explained, the yen has been very strong, thus making it difficult to make money from cars exported from Japan.

In response, the carmaker is shifting production to the UK, the US and China.

It is "heartbreaking" for Nissan's Japanese staff to see production moved out of the country, Mr Dodge said.

Nissan is set to become the first carmaker in the UK to produce 500,000 cars in a year

"They can make cars as well as anybody," he said, "but they're at a significant disadvantage when compared with rivals selling cars in dollars, euros or pounds."

But the strong yen is not the only reason why Nissan makes ever more cars abroad.

Investment and production in growth markets around the world would probably continue even if the yen was to fall in value, as it is expected to do under the country's next prime minister, Shinzo Abe.

"If you've got a manufacturing base and a supply base set up, it is best to produce and sell in one currency," said Mr Dodge.