Nissan 'U-turn' expected on new X-Trail SUV in Sunderland

The Sunderland plant opened in 1986

Nissan is expected to announce that it is cancelling a planned investment at its plant in Sunderland.

In 2016 the car maker said it would build the new model of its X-Trail SUV in the UK after receiving "assurances" from the government over Brexit.

The Japanese company is expected to say investment will be now be pulled, rather than existing work being halted.

Labour MP for Houghton and Sunderland South, Bridget Phillipson, spoke of her concern at the prospect.

"If confirmed, this would represent deeply troubling news for the north east economy," she tweeted.

"So many jobs and livelihoods depend on Nissan's success."

Labour Sunderland Central MP Julie Elliott suggested there was an "inevitable role that Brexit plays here.... None of it is conducive to encouraging business investment in this country".

"I will be doing everything I can to protect the jobs at the Sunderland plant. I will be asking for the government to intervene, and will stay in close contact with the company itself," she said in a Twitter post.

Nissan has produced cars at Sunderland since 1986 and employs almost 7,000 people.

Nissan announced in October 2016 it would build the next-generation X-Trail and Qashqai at Sunderland.

Production of the Qashqai - the best-selling crossover vehicle in Europe - makes up the majority of the current work at Sunderland and is not expected to be affected by the announcement on the X-Trail.

BBC business reporter Rob Young said: "The reasons for the investment cancellation are not known, but the industry as a whole has been warning Brexit uncertainty might hit investment."

Our correspondent said as the announcement was expected to be about planned future investment, the impact on Nissan's current workforce may be very minimal.

Nissan refused to shed light on the situation. A spokesman said it "does not comment on rumour or speculation".

Fall in diesel sales

There had been concerns that Nissan - part-owned by France's Renault - could move production to France in future to avoid any post-Brexit EU tariffs.

But when the X-Trail investment was initially announced, Nissan said hundreds of jobs would be created at the Sunderland plant.

It sparked questions over whether a deal between the car-maker and the government had been struck although ministers insisted that no "financial compensation" had been offered.

Peter Campbell, the motor industry correspondent at the Financial Times, said the fall in demand for diesels would appear to be one of the main factors in the announcement as Nissan was planning to make mainly diesel versions of the X-Trail in Sunderland.

He told the BBC: "If Nissan decided to make those cars in petrol it would have to ship engines over from Japan and the cost of doing that work against the decision to build it in the UK."

He added: "There are obviously other factors - car sales are down in the UK, they have fallen across Europe... and there is obviously the overhang of Brexit and the worries of the impact that might have on a plant that exports about 80% of its vehicles."

Last April, Nissan said it was to cut hundreds of jobs at Sunderland, amid a decline in diesel sales.