LONDON Japan's Nissan (7201.T) will decide by the end of the year whether to build its new Qashqai SUV model at Britain's biggest car plant, a source told Reuters, after CEO Carlos Ghosn met Prime Minister Theresa May to seek reassurance over the impact of Brexit.
Just weeks after telling Britain that he could scrap new investment unless he got a guarantee of compensation for costs related to Brexit, Chief Executive Ghosn held talks with May in her Downing Street residence in central London.
Businesses have been concerned that Britain is headed towards a "hard Brexit", which would leave it outside the European single market and facing tariffs of up to 10 percent on car exports.
Nissan, which made nearly one in three of Britain's 1.6 million cars last year, already builds the Qashqai sport utility vehicle at its Sunderland plant in northern England. The time it takes to bring a new car into production means Nissan needs to decide on the location of its next generation model soon.
"The decision-making process is in the next few weeks and months with a decision expected before the end of the year," a company source told Reuters on Friday, adding that the location might not be announced until early next year.
The source also said that a further meeting between May and Ghosn had not been scheduled but that senior Nissan and government officials would continue meeting in the coming weeks.
After speaking to May, Ghosn did not disclose whether the issue of compensation had been raised.
"I am confident the British government will continue to ensure the UK remains a competitive place to do business," said Ghosn, nicknamed "le cost killer" for slashing expenditure at French carmaker Renault (RENA.PA) which he also heads.
Ghosn's concerns over trade barriers led other carmakers to warn about the consequences of a "hard Brexit", favoured by some ruling Conservatives who wish to impose limits on immigration, a key concern of many voters who backed Brexit in June's referendum.
The chief executive of Britain's biggest automaker Jaguar Land Rover (TAMO.NS) told Reuters that any Brexit deal would have to guarantee a "level playing field", opening up the possibility that others too would seek financial guarantees.
The government has said it would do everything it could to encourage, develop and support strategic sectors of the economy such as car manufacturing. May said on Friday she would cooperate with the Japanese carmaker in the future.
"We will continue to work with Nissan as we develop the environment for competitiveness of the automotive industry here in the UK to ensure its success," she said after meeting Ghosn.
Last month Japan published a list of requests to Britain and the EU over Brexit, including maintaining the current duty-free trade between Britain and the EU and preventing any additional customs clearance burden on trade.
Nissan, Toyota (7203.T) and Honda (7267.T) together built almost half of all of Britain's cars in 2015.
The largely foreign-owned car industry was a strong supporter of continued membership of the European Union ahead of the June 23 vote, benefiting from unfettered access to the world's biggest trading bloc and its standardised regulations.
On Wednesday, a dispute between Britain's biggest retailer Tesco (TSCO.L) and consumer goods company Unilever (ULVR.L) caused by a plunge in the pound since Britons voted to leave the EU highlighted business tensions following Brexit.
Ghosn said that it was important that the Sunderland facility, which directly employs 7,000 people and many more through the supply chain, remains one of the firm's most efficient plants.
"We want to ensure that this high-performing, high-employment factory remains competitive globally and continues to deliver for our business and for Britain."
(Additional reporting by Kylie Maclellan; editing by Guy Faulconbridge/Keith Weir)