The new version of the Land Rover Defender will be built in Slovakia rather than the UK, its manufacturer has confirmed.

The last Defender came off the production line in Solihull in the West Midlands in 2016, after almost 70 years continuous production of the 4X4 vehicle and its forebears.

On Tuesday, Jaguar Land Rover (JLR) confirmed that the next model would be assembled at its plant in Nitra in Slovakia, which opened last October.

A camouflage-patterned prototype of the new model has been in testing. It is due to be unveiled this year, probably at the Frankfurt motor show.

Photograph: Nick Dimbleby

Although the move to Slovakia had been widely expected, it comes amid gloom over the prospects for British car manufacturing and follows the decisions to relocate production of the Discovery model last year.

After the boom of the first half this decade, British car manufacturing dropped 14% year-on-year in March. The industry body has warned that a no-deal Brexit could see it recede even further amid fears of a repeat of the “dark days of the mid-1980s”.

Photograph: Charlie Magee

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the new “limbo” around Britain’s departure date was creating further havoc with investment. “Just a few years ago, industry was on track to produce 2 million cars by 2020 – a target now impossible with Britain’s reputation as stable and attractive business environment undermined,” he said.

JLR has cut jobs and suffered heavy losses in the face of backlash against diesel vehicles, slumping demand in China, and Brexit uncertainty. The company posted a quarterly loss of £3.4bn in February.

JLR emphasised that the new Defender had been designed and engineered in the UK, and would also use engines built in Wolverhampton “reinforcing both the company’s British roots and the diversified, globalised nature of its manufacturing strategy”. It said the 2020 model was now in its final phase of testing, which would include wildlife parks in Kenya, after trials in extreme temperatures in the desert and the Arctic.

The company said the decision to move the Defender abroad came amid plans for “significant investment” at the Solihull plant, for the next generation of Range Rover and Land Rover models.

There are still hopes that Ineos, the company owned by Britain’s richest man, Jim Ratcliffe, could manufacture the Projekt Grenadier 4x4, its planned rival to the Defender, in Britain. However, Ineos announced last month that the engines would be supplied by BMW in Germany.