(Yicai) June 5 -- The British plant of Japan’s Nissan Motor will begin turning out passenger vehicles for Chery Automobile, as Chinese carmakers increasingly tap underused overseas production capacity to support their global ambitions.

Nissan and Chery International UK have signed a non-binding agreement to explore contract manufacturing at the Sunderland plant, the Yokohama-based company said in a recent statement. The factory will remain fully owned and operated by Nissan, which will also continue to employ all of its workers.

The deal is expected to lift utilization at the factory, where capacity use was below 50 percent last year amid slower-than-expected electric vehicle adoption in Europe. The factory is Nissan’s last production base in the region and a key part of its electrification strategy.

Manufacturing for Chery is expected to begin on Sunderland’s first production line in fiscal year 2027, after Nissan shifts its existing models to the second line. The arrangement could become a template for broader cooperation between Chinese and global auto companies as they seek to make better use of manufacturing capacity worldwide.

Nissan launched its “Re:Nissan” restructuring plan last year after posting a steep loss in fiscal 2024. The plan calls for cutting its global vehicle plant count to 10 from 17 by the end of fiscal 2027 and eliminating about 20,000 jobs. Sunderland will stay open and keep shifting over to EV production.

Even so, the plant has been hurt by Europe’s slower-than-anticipated switch to EVs. Its capacity utilization rate was only 45.5 percent in 2025, according to Japanese auto industry researcher MarkLines.

Last month, Nissan moved production of its existing models to the plant’s second line to improve efficiency, while the first line is slated to begin original equipment manufacturer work for Chery starting in fiscal 2027.

The partnership follows a series of overseas manufacturing deals by Wuhu-based Chery involving former Nissan assets. In 2024, Chery and Spain’s EV Motors acquired Nissan’s Barcelona plant to make vehicles under the Ebro brand. This January, Chery agreed to buy Nissan’s Rosslyn plant in South Africa, with the transaction expected to close by midyear.

Other Chinese automakers are also expanding their overseas manufacturing footprints. Last month, Yicai reported, citing a person familiar with the matter, that Stellantis’ Rennes-la-Janais plant in western France will provide OEM services for Wuhan-based Dongfeng Motor.

Media outlets also reported in May that Geely Auto had reached an agreement with Ford Motor to acquire the Body 3 vehicle body assembly line at Ford’s Valencia plant in Spain.

Editors: Dou Shicong, Emmi Laine