NISSAN moved to allay job fears last night after admitting it had scrapped a potential replacement for the Almera model manufactured at its North-East plant.

Work on a replacement for the popular mid-sized hatchback started shortly after the current car began rolling off the production line at Sunderland in January 2000.

The Northern Echo understands that the project had reached an advanced stage and several North-East component suppliers had already tendered for potentially lucrative parts supply contracts.

But workers were told after Christmas that Nissan decided to cancel the car after a review concluded that it would be unprofitable.

Last night, a spokesman for the company, which directly employs more than 5,000 workers and supports the jobs of thousands more across the region, said: "It isn't in the interests of Nissan or our suppliers to push ahead with an unprofitable project."

Nissan plans to manufacture 350,000 vehicles at its Sunderland plant in 2003. Production will be split across the brand new Micra model, the Almera and the Primera ranges. With the Micra coming on stream this year and the Primera still a relatively young design, the next model due for replacement is the Almera.

Nissan confirmed last night that one potential Almera replacement which could have been built in the UK had been canned. A spokesman said: "We cannot continue with a project that is going to be unprofitable."

However the company stressed that the decision did not mean Sunderland was now out of the running for the Almera replacement.

"The Almera market is a very large one; that's why we need to get it right. There are other alternatives on the drawing board. Nothing has been decided."

The Sunderland factory will be expected to bid for the next Almera contract which ever design gets the final go-ahead.

Nissan bosses say cars are more expensive to produce in the UK despite Sunderland's record as the most productive factory in Europe. They have urged the Government to join the single currency as soon as possible.

"The euro is one thing that may count against us landing the next Almera," admitted the spokesman. "But it is no different to the situation we faced with the Micra and we won that one."