Nissan will build its next Qashqai SUV as well as the X-Trail SUV model in Sunderland, marking a huge vote of confidence in the UK.
The department for business, energy and industrial strategy has confirmed the news after months of uncertainty following the Brexit vote. The decision comes following "support and assurances from the UK government", according to Nissan's chief executive Carlos Ghosn, and will secure 7,000 jobs.
Though the government wouldn't be drawn further on what assurances it had provided, a spokesman for the department told City A.M. that the government "understood the concerns of the industry".
He added that the decision reflected a real "vote of confidence in the economy", securing a long-term commitment from Nissan to stay in Sunderland.
The Japanese firm had said it could scrap new investment at Nissan's Sunderland plant, which built almost one in three of Britain's cars last year, without a guarantee of compensation for costs related to any new tariffs resulting from Brexit.
But Ghosn said he welcomed the Prime Minister's "commitment to the automotive industry in Britain and to the development of an overall industrial strategy".
The Sunderland factory makes around 500,000 cars a year.
Business secretary Greg Clark said:
This is fantastic news for the UK economy, the people of the North East as well as the automotive industry and its supply chain.
The UK automotive sector has had a remarkable year – exporting over a million cars around the world and today’s announcement underlines the confidence in the sector. The fact Nissan have not only made a long-term commitment to build the next generation Qashqai and Xtrail at Sunderland, but decided to upgrade their factory to a super-plant, manufacturing over 600,000 cars a year, is proof of the strength of the sector.
Earlier this month, Nissan's chief executive visited Prime Minister Theresa May to talk about Brexit, after rumours that the company was intending to put the brakes on investment in the UK. On leaving the meeting Ghosn said he was "confident the government will continue to ensure the UK remains a competitive place to do business".
The news came as UK car manufacturers purred along post-Brexit vote, despite many airing concerns over what the uncertainty might do.
Car exports rose almost one per cent in September according to the Society of Motor Manufacturers and Traders (SMMT). It said 1,000,642 cars have been exported so far this year – up 12 per cent from 891,492 at the same point last year.
Mike Hawes, SMMT's chief executive, said the Nissan news confirmed Britain's status as a leader in automotive production. "To secure this position, however, we need government to provide public assurance to investors that our advantages will be maintained," he warned. "Namely, a competitive business environment, the ability to recruit talent from abroad and the continuation of all the benefits of the single market as we leave the EU.”