Nissan will move production of the next-generation Micra supermini out of its hyper-efficient plant in Sunderland, England, and build it instead on the European continent, say company sources.
The next Micra, scheduled for launch in 2003, will be built at Renault plants in France and Spain - alongside the Clio successor with which it will share a platform, the insiders say.
Last year Nissan built 130,000 Micras in Sunderland, in addition to 110,000 Almeras and 90,000 Primeras.
Sources say Nissan could make up the difference in Sunderland by shifting production of the new Almera Tino compact minivan from its plant in Barcelona, Spain, to the UK. Tino production begins in Barcelona this month.
A Nissan Europe spokeswoman in Paris said the strength of the British pound is forcing the company to reconsider Micra production in the UK. But she denied that a decision about where to build the successor had been made.
'The issue was raised because of the level of the pound,' she said. 'We hope that the pound will move in the right direction.'
Nissan is not the only UK carmaker feeling the pressure of the strong local currency. Ford is now deciding the future of its Dagenham, England, plant, and the strengthening of the pound deepened BMW's troubles with Rover Group.
The exchange rate problems were made worse last week when the euro fell to a record low against the US dollar.
'The strength of the pound is damaging the car manufacturing base in this country (the UK),' said John Cushnaghan, Nissan Motor Manufacturing UK's managing director.
The job of rethinking Nissan's European manufacturing strategy has been given to Ian Gibson, who retired recently as president of Nissan Europe. Gibson gave up his day-to-day duties but remains senior vice president of Nissan and has joined the Nissan Europe supervisory board.
'It is Ian Gibson's highest priority issue to find a solution to these problems,' said a senior Nissan Europe manager who asked not to be named.
The Economist Intelligence Unit has ranked Sunderland as Europe's most productive auto plant for several consecutive years. But the rise of the pound against other European currencies has put cost pressure on the plant.
Nissan has asked its UK suppliers to invoice in euros rather than pounds and has begun moving some contracts to sources on the European continent.
Plans to shift Micra out of the Sunderland plant are also being driven by technical reasons. The plant now builds cars based on three separate platforms.
'At some point my hope is to reduce the number of platforms,' said Cushnaghan. As the next Primera, Tino and Almera will share the same platform, Sunderland could end up moving from a three-platform plant to just one.
Stephane Farhi contributed to this report