The Department of Trade and Industry, which is providing pounds 5m of grant aid towards the project, said the investment had been secured in the face of stiff competition from rival car plants in France.
Nissan said the new model, a cross between a hatchback and a 4x4, would go into production in December next year, lifting output from the plant to about 400,000 vehicles a year and reinforcing its position as the UK's biggest car plant.
Sunderland's 4,100-strong workforce makes the Primera, Micra and Almeira. Production last year was about 320,000 cars, four-fifths of which were exported. The plant's manager, Colin Dodge, said the aim was to produce about 130,000 of the new "compact-crossover" vehicles a year. The car, based on the Qashqai concept vehicle unveiled a year ago at the Geneva Motor Show, will go on sale in 2007 and will be the first Nissan car to be designed and developed in the UK as well as being built here.
Nissan has already announced plans to build a convertible version of the Micra and a new mini-MPV, the Tone, at Sunderland. Output of the Almeira is likely to be cut or phased out when the crossover car goes into production.
A spokeswoman for the DTI said the maximum amount of Regional Selective Assistance Nissan could have received for the new car under European aid rules was 6 per cent, or pounds 13.4m. The Sunderland plant has received pounds 178m in RSA since Nissan came to Britain in 1984.
Mr Dodge said the RSA grant had been "incredibly helpful" in securing the project for Sunderland. The plant was in competition with car plants in France owned by Renault, which holds a 44 per cent stake in Nissan.
The DTI spokeswoman said the French government had not offered Nissan a rival subsidy deal in an effort to win the project because this was not allowed under EU aid rules.
Outlook, page 37Reuse content