Nissan and Chery International UK have signed an agreement to explore manufacturing Chery passenger vehicles at the Japanese firm’s Sunderland plant.

In a significant boost for the UK automotive sector, Nissan’s factory in the North East could begin building Chery passenger cars as early as 2027.

Under the terms of the non-binding Memorandum of Understanding (MoU), the Sunderland facility would remain fully owned by Nissan, with the team at the plant employed by Nissan. The MoU includes the possibility that Nissan would aim to begin manufacturing Chery International UK passenger vehicles on the plant’s idle Line One in financial year 2027.

The much-rumoured announcement would boost factory efficiency and comes after Nissan announced in May that it would consolidate its manufacturing operations onto Line Two to investigate opportunities to secure better plant utilisation.

Massimiliano Messina, Nissan’s chairperson for Africa, the Middle East, India, Europe and Oceania, said: “This is an important step forward for our operations.

“We are looking forward to working with Chery International UK in the coming months to finalise a position that is optimal for both companies.”

The contract manufacturing deal would help Chery bypass strict import tariffs and the post-Brexit EU–UK stricter 2027 ‘Rules of Origin’ thresholds by producing vehicles locally. Chery has already pursued a similar localised production blueprint in Spain by reviving a former Nissan plant in Barcelona.

The deal comes days after Stellantis and Chinese EV maker Leapmotor announced that they are expanding their 51/49 joint venture with a massive strategy to build and co-develop affordable electric vehicles in Europe.

The MoU is non-binding, and discussions are ongoing between the two companies, with no further details to be made public at this stage.

Opened in 1986, Nissan Sunderland is the UK’s largest car manufacturing plant, producing the Qashqai and Leaf, plus the upcoming Juke EV. Employing over 6,000 people, the facility is home to Nissan EV36Zero; a multi-billion pound blueprint transforming the Sunderland manufacturing plant into a flagship EV hub.

Unite national officer Steve Bush said it was very good news for Nissan’s Sunderland workers and the UK’s automotive industry in general at a time of uncertainly for the sector.

“Chinese vehicles are increasingly visible on British roads so it makes sense for UK workers to build them here as well.”

Unite also said that it’s collaborating with the Government to reform the ZEV mandate, warning that failure to act will constrain future UK car production volumes.

Bush added: “To ensure the UK auto sector’s future remains a positive one, Unite is working with industry and government on reforming the ZEV mandate. Without this, car production volumes will be kept artificially low.”