The British motor industry received a significant boost yesterday when Nissan said it would build its new European family car at its Sunderland plant, creating 200 jobs, and Peugeot pledged to keep its Ryton factory near Coventry open for the foreseeable future.
Nissan, the Japanese car-maker, in which Renault owns a 44% stake, said it would build 100,000 of the new Tone model at Sunderland, with the start of production planned for January 2006.
Announcing the move at the Paris Motor Show yesterday, Patrick Pelata, head of Nissan's European operations, said the decision showed that the group "can do business in Europe". The continuing strength of sterling has been a source of anxiety to Japanese carmakers who, until recently, were at the forefront of the campaign by foreign investors for the UK to join the euro.
Nissan said it would invest £125m in the new car, which will compete with the likes of Renault's new Modus people-carrier, and £25m of this will go to Sunderland. The plant, which employs 4,300 people, is rated Europe's most productive, with an annual output of 330,000 and capacity of half a million.
The decision is a further boost to Sunderland which has, in recent years, fought off opposition from rival Nissan and Renault plants in mainland Europe, particularly France and Spain, to build new models such as the revamped Micra. The new model will be built on a stretched Micra platform.
Jean-Martin Folz, chief executive of Peugeot Citroen PSA, said in an interview that Ryton, which employs 3,200, would remain "our key site" for making the best-selling 206 model for "many years".
There has been continued anxiety that Ryton, which was forced to axe its fourth daily shift last year because of sagging demand, would eventually be closed because of higher labour costs related to the strong pound and Britain's self-exclusion from the eurozone. It is not far from the Browns Lane plant in Coventry that Jaguar said last week would cease final assembly of cars. But Mr Folz, who reaffirmed his group's target of selling 4m cars by 2006 compared with 3.3m last year and 2.1m in 1997, said the British plant was the only one in the world producing the full gamut of the 206 range. It is expected to produce 190,000 cars this year.
Meanwhile, Ellesmere Port, the Vauxhall plant in Cheshire producing the new Astra and working at full capacity, is likely to be excluded from a savage round of cuts in labour costs planned by senior executives at loss-making General Motors Europe.
Fritz Henderson, GM Europe chairman, said in an interview that the British plant had shown a "pretty phenomenal turnaround". He said: "It was our worst plant and now has made really good progress, getting right into the middle of the pack, and next has to race for the front."
GM Europe, which lost $1bn in 2002 and $500m (£278m) last year, is expected to lose a further $200m this year. Rick Wagoner, the global group chief executive, indicated it would be tough to break even in 2005.
Mr Henderson refused to quantify the scale of the envisaged cuts next year but said: "Some of our competitors have found a way to be profitable and we haven't; there's no excuse for being where we are."
His colleagues put planned cuts at 30% in Germany where the main Ruesselsheim plant near Frankfurt has been under threat of closure in the run-up to talks with unions over a pay freeze. But it emerged that GM is more likely to run down or even close its Saab plant at Trollhatten, Sweden, before switching production of the replacement Vectra and Saab mid-sized models to Germany in 2008.
Michael Ganal, BMW's head of sales, also boosted British car operations by saying that sales of the Mini next year would exceed this year's likely record of more than 180,000. Helmut Panke, BMW chief executive, said Mini sales would have reached more than 140,000 by the end of this month and group sales and profits were likely to be a new record this year, with sales of more than 1.1m - on course for 1.4m in 2008.
