By on January 20, 2010

The SEAT Exeo. Picture courtesy

In November last year, we reported about rumors in the Chinese press that Volkswagen might introduce the SEAT brand to the Middle Kingdom. We didn’t put much credence in the rumor, due to some inconsistencies in the reports. The Guangzhou auto show, at which the news was supposed to be announced, came and went with no announcement. Another Chinese rumor.

Now, the matter is back on the ticker.

Reuters has it from China’s 21th Century Business Herald that Volkswagen plans to build a SEAT plant in China, along with its Chinese joint venture partner FAW. The new plant will supposedly be based in southern Guangzhou, where Volkswagen is weak, and where the Japanese reign supreme.

Volkswagen and FAW Group already operate four plants in the cities of Shanghai, Nanjing, Changchun and Chengdu, making Jetta, Bora, Golf, Sagitar, Audi and more. VW also has a tie-up with SAIC, making Passat, Santana, Polo and Skoda models. The two joint ventures rank as China’s top passenger vehicle makers.

In an emailed statement to Reuters, VW said “its first step was to increase capacity in the Nanjing and Chengdu plants and no definite information was available for the new plant in Guangzhou.” Sounds like a definite maybe. Money would be no object. Volkswagen has earmarked €4b ($5.7b) to expand its production and R&D capacity in China.

With SEAT, VW is bringing the last of its four volume brands to China, and definitely the weakest of the four. SEAT sold 316,928 units in Europe in 2009, down 5.8 percent. Recurringly, SEAT has to endure rumors of imminent closure, which so far never were substantiated. If SEAT can sell the 200,000 cars, for which the new Chinese plant supposedly has capacity, it would definitely put an end to the rumors.

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