The Nissan test: can we really negotiate Brexit sector by sector?

I wrote last month that a key test of Brexit success will be whether Nissan is still making cars here in ten years’ time. A few days later, Nissan chief Carlos Ghosn issued a warning that ‘If I need to make an investment in the next few months and I can’t wait until the end of Brexit, then I have to make a deal with the UK government.’ The investment decision he referred to — expected by Christmas, which means before Brexit talks even begin — is whether to build the next Qashqai model at Sunderland or in France, to avoid tariffs on exports when we leave the single market. And the deal he was fishing for was a promise of compensation if tariffs are imposed.

What’s at stake is huge: the wider UK automotive sector supports 800,000 jobs. Nissan’s Sunderland plant accounts for almost a third of all UK car production, and three quarters of its output goes to Europe. If Nissan scales back, Toyota in Derbyshire and Deeside — shipping 85 per cent to Europe — will follow. The head of Germany’s automotive industry association, Matthias Wissmann, weighed in last week to say that a hard Brexit could see the UK industry shrivel as production shifted to low-cost EU bases such as Slovakia and Poland.

And though Ghosn is a hard-headed decision-maker, there are emotional factors in play. He also runs Renault, which owns 43 per cent of Nissan, having spent much of his working life in France, where industrial jobs are in short supply. And his affection for his British workforce may have been tempered by the fact that Sunderland voted 61 per cent for Leave.

But sure enough, Ghosn drove into Downing Street in a Qashqai last Friday to receive ‘positive’ assurances from Theresa May that Nissan’s trading conditions will not be changed by Brexit — a promise that can only be fulfilled either by a guarantee of tariff compensation or by negotiating exemptions for the automotive sector in recognition of its pan-European supply chain, in which EU manufacturers stand to benefit from continuing access to the UK.