LONDON -- Nissan Motor Co. will build the new Qashqai at its UK factory and add a further model - the X-Trail, the automaker said today in a statement.
The decision is a major boost to Prime Minister Theresa May just months after Britain's vote to leave the European Union.
Nissan CEO Carlos Ghosn said in September that he could scrap new investment at the automaker's factory in Sunderland, northeast England, without a guarantee of compensation for costs related to any new tariffs resulting from Brexit.
"The support and assurances of the UK government enabled us to decide that the next-generation Qashqai and X-Trail will be produced at Sunderland," Ghosn said in today's statement.
The UK government has given Nissan a written commitment of extra support if Brexit reduces the Sunderland plant's competitiveness in return for new production investments, a source told Reuters. In addition to unconditional investment aid, Britain pledged to offer further relief if the terms of the UK's exit from the EU ended up harming the plant's performance, the source said.
However, a government spokesman denied that Britain offered Nissan compensation. "There is no compensation package," the spokesman said. "What we have made clear to Nissan and to others in the industry is that what we want is a competitive environment for the whole of the industry."
Nissan's Sunderland factory is the UK's biggest car plant and built almost one in three of the UK's cars last year. Nissan's decision had been seen as a key indicator of whether international firms would continue to invest in Britain following the Brexit vote.
The plan will help to secure at least 7,000 jobs.
A Nissan spokesman said hundreds of jobs could be created in a few years' time by the decision to build a new X-Trail in Sunderland if there is significant demand for the cars. The X-Trail is currently built for Europe in Japan.
Nissan has invested 3.7 billion pounds ($4.5 billion) in the 30-year-old Sunderland site and manufactured 9 million cars there. Replicating the effort in another country would be expensive for the automaker, which is aiming to cut costs amid intensifying competition from rivals.
Sunderland voted heavily in favor of Brexit during a June 23 referendum.
Reuters and Bloomberg contributed to this report