Is the future of the Sunderland Nissan site assured?

 

Following the announcement that the Nissan Note would leave the Sunderland plant assembly lines in 2017 and that keeping the Nissan Juke was not guaranteed at medium term (production of European versions of new Juke has however been confirmed to start in Sunderland in 2017), the question arises as to whether the activity of the Nissan Plant is really assured in the coming years, especially in the case of a hard Brexit (with reinstatement of customs duties).

 the last decade the Sunderland plant had already removed several models from its assembly lines: Almera in 2006, Primera in 2007, Micra in 2010. But these removals had been made with  objective to prepare the arrival of the SUV Qashqai,  whose production level is 300 000 vehicles a year since 2011.

The Nissan Juke and Note made it possible to saturate the Sunderland assembly lines, enabling the plant to approach the 500,000 units produced each year, making it one of the most important European factories in Europe in terms of production volume and the largest plant of the Renault-Nissan group on the European continent.

The closure of this plant is therefore unlikely at short term (the next generation of Nissan Qashqai will be launched in 2021, which gives time for the decision) since, on the one hand, the Renault-Nissan group does not have at this time other plants in Europe capable of absorbing Sunderland's production and, on the other hand, Sunderland plant has a high volume model (Qashqai) being in the position to use its capacities.

The future X-Trail (60,000 sales a year in Europe – launch planned in 2021) to be launched in 2019/2020 could also be manufactured in Sunderland, alongside the Qashqai.

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European plants: Utilisation rate status in 2016

 

European car plants (EU + Serbia + Turkey) have been used at an average of 82% of their capacity in 2016. This rate increased steadily these four last years: 68% in 2013, 74% in 2014, 81% in 2015 and 82% in 2016. Two factors have contributed to the growth of European plants utilisation rate:

1. The rise of the European market (+23% between 2013 and 2016),

2. The closure of several European factories.

The rate of 82% achieved in 2016 is one of the best in a decade, with a market of 17 million units expected in 2016. Only 2007 experienced a better rate with 85% of utilisation and a market of 18 million vehicles sold.

By country, Spain recorded the highest rate (91%), ahead England (90%), Germany (88%) and Turkey (87%).

By carmaker, Tata recorded the highest rate (109%), a very high figure which pushed the Indian group to build a new plant in Slovakia. Tata ahead Hyundai-Kia (98%), BMW (92%), Daimler (90% ) and Volkswagen (87%).

Japanese carmakers recorded the lowest rates: Suzuki (45%), Honda (55%), Toyota (77%). The FCA group also has a low utilisation rate (64%) but in progress thanks to Jeep Renegade and Fiat 500X, produced in Italy. This growth is expected to continue with the arrival of the Dodge Journey on Italian assembly lines.

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The Japanese market of hybrid vehicles (HEV) in 2016

 

With nearly one million HEVs (Hybrid Electric Vehicles) which will be sold in Japan in 2016, the Japanese market is still the world market for HEVs, far ahead of the US (just over 300,000 in 2016), Europe (a little over 200 000 in 2016) and China (less than 50 000 in 2016).

This is explained by the fact that Toyota is promoting this type of engine since 1997 and applied it to most of its models, so that half of Toyota currently sold in Japan are HEVs, two thirds of HEVs sold in Japan are Toyota and HEVs account for  a quarter of the Japanese market.

In comparison, the market of BEV (Battery Electric Vehicles) and PHEVs (Plug-in Hybrid Electric Vehicles) is very low in Japan: only 30,000 sales in 2016.

The Japanese market of HEVs had declined in 2015, but rose again in 2016, due to the renewal this year of the Toyota Prius which occupies a prominent place in Japan (23% of the HEV market).

Five Toyota models are positioned  in the top 10 hybrids in 2016.
The other five models in the Top 10, coming from Suzuki, Nissan and Honda brands are totally unknown in Europe and North America. These carmakers offer  models specific to Japan, which represent a third of HEVs sales in Japan.

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Toyota and Suzuki could come together to form the world number one

 

Toyota announced that it was negotiating an alliance with its compatriot Suzuki, a “midgets” specialist, in a context of consolidation of the automotive industry in Japan (Mitsubishi was bought back 34% by Nissan in October).
Toyota
and Suzuki have justified this  joining process by the recent changes in the sector.

According to Inovev, the takeover of Mitsubishi by Nissan and the dynamism of the Volkswagen group could relegate the Toyota group (current perimeter – without Suzuki) from the first to the third place worldwide.
A rapprochement between Toyota and Suzuki would allow this group to take the first place worldwide.
Toyota
sells 10 million vehicles a year and Suzuki 3 million, a total of 13 million vehicles per year. This group would overpass the Volkswagen and Renault-Nissan-Mitsubishi groups in terms of sales volume.

By joining Suzuki, which has a dominant position in India (56% market share), Toyota can hope to gain strength in this country where it has not really taken off, and more generally in the emerging markets of Asia. Suzuki could also benefit from the commercial strength of Toyota, in addition to its hybrid or fuel cell technologies. Finally, this group will become the undisputed world leader of midgets, thanks to its two brands Suzuki and Daihatsu (a wholly owned subsidiary of Toyota since 2016). Nearly 2 million midgets of the two brands are sold each year in the world, mainly in India and Japan.

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The global market of hybrid vehicles (HEV) in 2016

 

The global market of HEVs (Hybrid Electric Vehicles) experienced a small decline in 2015, but continued to grow in 2016, thanks to the launch of the next generation Toyota Prius. Indeed, the Prius by itself accounts for a quarter of sales of HEVs in the world and its life cycle has a strong impact on the total of HEVs sales. 410,000 HEV Prius will be sold in 2016 (excluding Prius C and Prius Plus) on a total of 1.65 million HEVs.

The HEVs sales have doubled worldwide in six years between 2010 and 2016, from 0.85 to 1.65 million units, while at the same time global sales of all vehicles (including all motorizations) increased only 19%. In 2016, Japan accounted for 59% of the world market for HEVs, the US 19% and Europe 13%.

By itself, the Toyota group accounts for over 70% of sales of hybrid vehicles globally, i.e. 1.2 million units in 2016.
Hyundai-Kia group will attempt to take an increasing share of the HEV market with Hyundai
Ioniq and Kia Niro, as well as twenty new models of both brands to be launched by 2020.

Compared with global sales of electric vehicles (BEV –Battery Electric Vehicles- and PHEVs - Plug-in Hybrid Vehicles), global sales of HEVs are still much higher but the gap between the two vehicle types decreases year by year: 2 7 times more in 2016 (1.65 million against 0.6 million), while in 2014 it was 5.7 times (1.65 million against 0.3 million).

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