Nissan’s Sunderland plant experienced a significant decline in production last month. The global automotive brand saw a drop of over 20% year-on-year.
The slowdown follows a wider trend affecting multiple car manufacturers. August’s figures reveal the challenges faced by the industry, with European sales also decreasing.
Production Decline in Sunderland Plant
The number of cars produced by Nissan’s Sunderland plant last month declined by more than 20% year-on-year, mirroring a global trend affecting the Japanese automotive brand’s factories. In August, Nissan produced 13,374 vehicles, marking a 22.9% decline from the previous August. This substantial decrease underscores the challenges faced by car manufacturers in the current market climate.
Sales in Europe, a critical market for North East-made vehicles, fell by 4.5% year-on-year, totalling just over 17,000 units. These numbers follow smaller declines observed in July and contribute to a broader 8.4% decrease among all UK manufacturers, marking the sixth consecutive month of reduced output, as reported by the Society of Motor Manufacturers and Traders (SMMT).
Impact of Seasonal Shutdowns
August is traditionally a slower period for the automotive industry due to factory shutdowns and retooling for new models. This year’s figures reflect this seasonal trend, with significant declines in production, particularly for electrified models, including battery electric, plug-in hybrid, and hybrid vehicles.
The production of these electrified models fell by 25.9%. However, this decline is anticipated to be temporary, with expectations for a rebound as new models enter production. The £24bn investment in UK automotive manufacturing announced last year is expected to play a pivotal role in this recovery.
Investments in Electric Vehicle Production
The SMMT noted that the recent decline came as manufacturers wound down key models and prepared for new, primarily electric vehicles.
Among the significant investments is over £1bn allocated to Nissan’s North East operations. This includes developing new electric Qashqai and Juke models, constructing a third gigafactory for battery production, and establishing extensive on-site renewable energy sources for the Sunderland plant.
With these investments, the Sunderland plant is set to transition entirely to electric vehicle production, aligning with global trends towards sustainable and eco-friendly manufacturing.
Financial Challenges and Forecasts
In July, Nissan adjusted its global financial forecasts after experiencing a significant drop in profits in the last quarter. Between April and June, Nissan’s profits fell by 73% compared to the previous year, despite a 3% increase in sales, amounting to 2.99 trillion yen (£15.2bn).
The decline in profits was attributed to incentives and marketing efforts aimed at attracting US customers, which, despite boosting sales, negatively impacted overall profitability. This highlights the complex dynamics of balancing sales growth with profitability in the automotive sector.
Optimism for Future Growth
Despite the current challenges, the automotive sector remains optimistic about a return to growth. The record levels of investment announced last year are expected to drive this recovery.
Mike Hawes, SMMT chief executive, stated, “August was always going to be a quieter month for output, with traditional summer shutdowns and factories prepping to switch to new models. The sector remains optimistic about a return to growth, however, with record levels of investment announced last year.”.
Hawes emphasised the importance of UK industry maintaining its competitiveness. He looks forward to the Chancellor’s Autumn budget and the government’s proposed Industrial Strategy as critical opportunities for supporting the automotive sector.
Strategic Shifts and Industry Plans
Hawes also referenced Labour’s Automotive Sector Plan, introduced at their Party Conference last year. This plan serves as a blueprint for the industry’s future, with proposals for cheaper, green energy, skills investment, and cultivating healthy markets both domestically and internationally.
“These are the measures that would enable the industry to drive economic growth in every part of the country,” Hawes added, highlighting the strategic shifts necessary to bolster the automotive sector’s long-term viability and success.
Renault Shares Buyout
In a recent development, Nissan announced the repurchase of shares previously owned by Renault, amounting to a 5% stake in the company. This move is part of Nissan’s broader strategy to strengthen its corporate structure and consolidate control over its operations.
Nissan’s recent production and sales figures highlight the challenges currently faced by the automotive sector. However, significant investments in electric vehicle production and strategic shifts indicate a promising path forward.
The industry remains hopeful, with expectations for recovery driven by substantial investments and strategic initiatives aimed at maintaining competitiveness and fostering growth.
