Nissan will bring yet another hatchback to Wearside and with it more than 1,000 jobs to the local economy.
The car manufacturer confirmed it would create 225 jobs at its Washington plant and up to 900 jobs in the component supply chain.
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The new car follows the announcement that Nissan's new "Invitation" is also being built here and means that Nissan will employ more than 6,000 people in the North East.
The latest model will be a C-Segment hatchback and will compete with the likes of the Vauxhall Astra and Ford Focus.
Kevin Fitzpatrick, Nissan's vice-president for manufacturing in the UK, said it was "massive for Nissan on Wearside" and would mean the plant would now operate its production lines 24 hours a day.
Meanwhile, David Cameron said in Japan that it was "proof of the strength and vitality of British manufacturing", as he was due to visit the car company's headquarters in Yokohama.
He went on to say that he wants to sell more things back to Japan.
– Prime Minister David Cameron
"The news today that Nissan is going to create a new hatchback in Sunderland is going to create thousands of jobs. So I'm here to encourage investment in Britain, but also to sell things to Japan.
He added: "It's fantastic news that Nissan will be building their new hatchback model in the UK and that they expect to create more than 1,000 jobs at the Sunderland plant and in the supply chain across the country."
"It is proof of the strength and vitality of the British manufacturing industry that leading companies like Nissan are expanding their production in the UK."
The news has also been welcomed by business figures, who have been tweeting through the day.
Fantastic news for the Nissan Plant in Washington, Sunderland. The new hatchback will be produced here creating another 1,000 quality jobs.
The Leader of Sunderland City Council Paul Watson said: "The creation of more than 1000 new jobs at the Nissan plant and in the supply chain is fantastic news for Sunderland and the north east.
"It confirms Sunderland's position at the heart of European and World automotive manufacturing and is further evidence that the city is open for business and open to business."