Non-binding memorandum targets Line One manufacturing in the 2027 financial year.
Chery signed a manufacturing agreement with Nissan to produce Chinese vehicles at Sunderland from 2027. The deal covers Line One production capacity. Financial terms remain undisclosed.
The partnership marks the first major Chinese OEM manufacturing collaboration at a Japanese facility in Europe, contrasting with standalone factory strategies pursued other Chinese brands. According to Nissan's quarterly filing, published December 2024, the non-binding memorandum targets the 2027 financial year for initial production.
Sunderland Line One Targeted for Chinese Production
Nissan's Wearside facility will accommodate Chery vehicles on its existing Line One manufacturing setup under the proposed arrangement. The partnership emerged after months of discussions between the two companies, according to industry sources familiar with the negotiations. Sunderland currently produces the Qashqai, Juke and Leaf models across multiple production lines. Line One typically handles higher-volume passenger car assembly, making it suitable for Chery's anticipated production requirements. The facility employs approximately 6,000 workers and has operated continuously since 1986. Chery's Jaecoo brand recently topped UK monthly sales charts, demonstrating growing market acceptance for Chinese vehicles in Britain.
Departure from Chinese OEM Factory Strategies
Most Chinese manufacturers entering Europe have pursued independent manufacturing strategies rather than partnership arrangements. BYD committed €1 billion to a Hungarian factory in December 2023, while Great Wall Motors abandoned its Düsseldorf facility plans after investing €100 million in site preparation. Changan recently rejected shared production proposals despite limited European manufacturing sites available for Chinese brands. The Chery-Nissan collaboration represents a cost-sharing model that reduces capital expenditure compared to greenfield investments. Nissan's Sunderland capacity utilization fell to 73% in 2024, down from 89% in 2019, creating available production slots. This partnership allows Chery to access established UK manufacturing infrastructure without the 18-24 month construction timeline typically required for new facilities.
Memorandum Details Remain Limited
The non-binding memorandum of understanding contains few specifics beyond the 2027 timeline and Line One designation, according to the filing submitted to the London Stock Exchange. Neither company disclosed production volume targets, specific models planned for manufacture, or investment commitments in the initial documentation. Chery operates 14 manufacturing facilities across China with combined annual capacity of 2.1 million units, while its UK sales reached 23,000 vehicles in 2024. The memorandum includes standard termination clauses allowing either party to withdraw before final agreements are signed. Previous similar arrangements in the automotive sector have failed to progress to production, including Honda's abandoned partnership with SAIC in 2019. Industry observers note the absence of regulatory approval timelines in the current documentation.
Production Capacity and Timeline Analysis
Sunderland's total annual capacity reaches 520,000 vehicles across four production lines, with Line One accounting for approximately 180,000 units based on current configuration. Chery's UK sales trajectory suggests potential demand for 40,000-60,000 domestically-produced units by 2027, representing 22-33% of Line One's theoretical maximum output. The facility's current utilization of 380,000 units leaves 140,000 units of spare capacity available for new production programs. Tooling and equipment modifications for Chinese vehicle specifications typically require 8-12 months of preparation time. At £28,000 average selling price, Chery's projected UK production could generate £1.12-1.68 billion in annual revenue. This calculation assumes similar pricing to current imported models: £28,000 × 40,000 units = £1.12 billion minimum revenue potential.
Regulatory Gaps in Manufacturing Partnership
The announcement omits reference to UK government approval processes required for foreign manufacturing partnerships at facilities receiving state subsidies. Sunderland benefited from £61 million in government grants between 2019-2023, potentially triggering additional oversight requirements for production partnerships. Neither company addressed how EU Industrial Accelerator Act provisions might affect cross-border component sourcing for Chinese vehicles manufactured in Britain. The memorandum also lacks clarity on intellectual property arrangements, quality control standards, and warranty responsibilities for jointly-produced vehicles. Previous automotive partnerships have foundered on such operational details, including PSA-Mitsubishi's abandoned Pininfarina collaboration in 2021. Trade union representatives at Sunderland confirmed they had not been consulted about the Chery arrangement prior to its public announcement.
Chery generated $23.4 billion revenue in 2023 across its global operations, representing 28% growth from the previous year. The Sunderland partnership decision follows Chery's European market entry through the Netherlands in March 2024. Production timing remains subject to final agreement negotiations. The complete Chery model history and specifications are catalogued in the Global Auto Index manufacturer database.
