Nissan and Chery have officially confirmed they are negotiating a potential contract manufacturing agreement for Chery passenger vehicles at Nissan’s Sunderland, UK, plant. Nissan had previously announced plans to reduce its own production at the factory to a single production line.
As early as April, an unconfirmed report by the Financial Times claimed that Nissan and Chery were negotiating a form of ‘subleasing’ arrangement for the Sunderland plant. Nissan currently builds the combustion-engine Qashqai and Juke models there, as well as the third-generation battery-electric Leaf. Electric versions of the Qashqai and Juke are also scheduled to enter production from next year.
However, this expansion alone does not appear sufficient to fully utilize the plant’s annual production capacity of 500,000 to 600,000 vehicles, given that Nissan built only 273,174 vehicles at the site last year. In May, Nissan announced plans to reduce the factory, which is currently operating at around 50% capacity, from two production lines to one.
That is where Chery comes in. The Chinese group is already active in several European countries with its brands Jaecoo, Omoda, and its core brand Chery. To advance its ambitious plans in Europe, Chery has now signed a Memorandum of Understanding with Nissan to explore the possibility of contract manufacturing passenger cars at the Sunderland plant for Chery International UK.
No details yet
It remains unclear whether the collaboration will be limited to one of the three brands or a specific powertrain type, such as battery-electric. However, such contract manufacturing is likely to be open to any technology. After all, the production facilities in Sunderland have long been designed to manufacture vehicles with different powertrains on a single line.
Chery itself offers a range of vehicles in Europe, from internal combustion engine and hybrid models to battery-electric cars. Interestingly, the core Chery brand, which is already quite successful in the UK, currently offers only internal combustion and hybrid models, whereas the Omoda 5 and Jaecoo 5 are available as fully electric models
Under the current proposals, the Sunderland plant would remain fully owned by Nissan. The local workforce would also continue to be employed by Nissan. The agreement includes the option for Nissan to begin producing vehicles for Chery International UK on production line one from the fiscal year 2027. Nissan’s fiscal year runs from 1 April 2027 to 31 March 2028, which means Chery production in Sunderland could start in early 2028.
Nissan’s top executive, Massimiliano Messina, stated: “This is an important step forward for our operations. We are looking forward to working with Chery International UK in the coming months to finalize a position that is optimal for both companies.”
Part of the industrial base
The MoU between the two companies is not legally binding, and negotiations are still ongoing and could collapse at any time. However, if the deal succeeds, it could secure a large proportion or all of the approximately 6,000 jobs at the UK’s largest automotive plant.
“This is very good news for Nissan’s Sunderland workers and the UK’s automotive industry in general at a time of uncertainly for the sector,” said Steve Bush, an official from the British trade union Unite in The Guardian. “Chinese vehicles are increasingly visible on British roads so it makes sense for UK workers to build them here as well.”
David Bailey, Professor of Business Studies at the University of Birmingham, added that this would be a ‘historic deal’. Twenty years ago, Chinese brands first attempted to enter the European market. “Now they’re going to build cars in Britain’s biggest car factory. China isn’t just competing with western carmakers anymore: it’s becoming part of the industrial base,” Bailey said.
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