Nissan and Chery have officially announced that they are investigating contract manufacturing, which would see Chery cars built on Nissan’s UK assembly line.

The announcement details a non-binding Memorandum of Understanding. Essentially, the first stage in a working relationship between the two companies.

Nissan stresses that the Sunderland factory in England’s north-east would remain wholly-owned by Nissan, and that the factory’s employees would remain employed by Nissan, and not by Chery.

Nissan’s restructuring program has seen it close seven production sites around the world, leaving 10 in operation.

In May, Nissan UK revealed that production of the Juke, Leaf, and Qashqai would be consolidated to one of Sunderland’s two production lines. Recent figures reveal that Sunderland is currently operating at roughly half its 500,000 vehicle annual production capacity.

No indication has been given as to which Chery models could be built at the Sunderland site, however the line-up may not be restricted to Chery-badged cars, with the Chinese company also selling its Jaecoo, Omoda, and Lepas brands in the UK.

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Nissan’s own ambition for Sunderland is to transform the site into a “flagship EV hub” for the brand, including production of the Leaf and new Juke EV, but that doesn’t necessarily limit the contract production potential to EVs only, with Chery production to be isolated to its own production line.

In a statement, Massimiliano Messina, chairperson of Nissan Africa, 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.”

All Chinese-sourced vehicles sold in the UK are covered by a 10 per cent import levy. UK assembly would avoid this tax, but also open the door to wider European distribution, with UK-built vehicles attracting no additional taxes when sold in the European Union.

The confirmation of talks with Chery also ends speculation that Nissan would offer factory space to its Chinese joint-venture partner, Dongfeng. That partnership remains unchanged and sees Dongfeng produce a number of Chinese-market Nissan models in China.

Nissan has targeted the 2027 financial year for the start of production of Chery vehicles at Sunderland.