By on August 10, 2012

Like the broader debt crisis in Europe, Volkswagen’s weak link has its origins in Spain. According to Reuters, Seat has incurred losses of $1 billion since 2008, and has been profitable only once over the past decade.

Seat is hampered by the twin forces of product overlap and a Spanish economy that’s rapidly circling the drain. A former Peugeot official is quoted as asking the question on everyone’s mind

“Skoda covers the same (compact to midsize) segments and is a thoroughly reliable mass market brand. Why bother keeping Seat…” 

One thing Seat does have is the youngest buyer demographic of all the VW group brands. VW is hoping that China and Russia will be lucrative markets for Seat, if Spain and the rest of Europe aren’t going to come through. The under-utilized capacity at Seat plants is at least being put to good use, building in-demand products like the Audi Q3 small crossover.

Volkswagen seems to be committed to helping Seat avoid the same fate as Opel – but many observers would rather see it die on the vine. What do you say, B&B?

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43 Comments on “QOTD: What’s To Be Done With Seat?...”


  • avatar
    mike978

    I recall for a decade ago that SEAT was meant to be in the sporty category along with Audi. Whereas Skoda stayed in the “mainstream” category with VW. It hasn’t worked out like that, even though SEAT has sportier styling, because VW allows all its brands to have sports models. For example you can get a VW Polo GTI, a Skoda Fabia vRS and a SEAT Ibiza FR/Cupra. And in time now doubt an Audi A1 R/RS. The same story is played out with the Golf/Octavia/Leon/A3 line-up.

    If they wanted to give SEAT a reason to exist they should have stopped Skoda from having a sports lineup and left Skoda to concentrate on the core of the market, not enthusiasts.

    SEAT has become like Pontiac, sporty in intent, but in execution not offering anything special (pre G8 days) from the other brands within the parent company. VW has been good at brand management but in this case they have slipped up.

    I don`t know about SEAT’s sales in China but they only sell the Leon whereas Skoda is in China and sells three cars (Fabia, Octavia and Superb) so I would think there would be minimal loss to closing SEAT down. I speak as someone who owned a 2002 SEAT Ibiza FR in the past.

  • avatar
    carguy

    The Seat brand needs some identity of its own so it either needs to become youth, green or sport oriented or something that VW, Skoda and Audi brand values don’t already cover. If not then its just another VAG badge engineering exercise and should be shut down.

    • 0 avatar
      mike978

      Exactly, but that is not forthcoming. As recent example is the new VW Up! which has a SEAT and a Skoda version. Both the SEAT and Skoda versions are cheaper than the VW, which seems to be the sole reason for them.
      SEAT even have a minivan in their line up (the Alhambra) which is a copy of the VW Sharan (itself shared with the Ford Galaxy). If SEAT were to be the sporty brand then having a full size (for Europe) mini-van is not the way. Skoda should have had it.

      • 0 avatar
        Lampredi

        “SEAT even have a minivan in their line up (the Alhambra) which is a copy of the VW Sharan (itself shared with the Ford Galaxy).”

        Only the first generation Sharan/Alhambra was the same car as the Galaxy, the second (current) generation, launched in 2010, is not shared with Ford.

        “If SEAT were to be the sporty brand then having a full size (for Europe) mini-van is not the way.”

        That’s also the reason why the Seat Inca (aka VW Caddy) panel van was axed back in the early 2000s.

      • 0 avatar
        mike978

        Lampredi – thanks for the correction on the Galaxy/Sharan link.

  • avatar
    Lampredi

    “VW has been good at brand management but in this case they have slipped up.”

    I’d say VW has been good at maintaining its brands’ strengths and preserving their identity (or at least it seems so from the outside). The problem with Seat is that it’s never really had a proper identity, or a raison d’être, even before it was taken over by VW, there’s simply no “there” there, and so even VW is stuck. No wonder why Piëch wants Alfa Romeo, which *is* a strong brand (but one only has to look at Seat to see what a VW-developed “Alfa” would be, which is why Alfisti like me are terrified of that prospect.)

    • 0 avatar
      mike978

      I agree, but they could have been more consistent in their attempts at giving SEAT the sporty image it was meant to have. VW has done very well with establishing Skoda as a cheap(er), quality brand. I recall Skoda being a laughing stock back in the 1980′s, but through good management (like Audi also) it has improved its reputation massively. SEAT could have done the same if they had given it the space (product wise) it needed on a consistent manner. Giving them a minivan and giving all brands sports models (vRS, GTi etc) hurt them.

      I can see Dodge having the same issues – a “sports” brand which has a minivan, other brands under the parent having sports models (SRT brand, 300 SRT etc) .

  • avatar
    Tosh

    VW is for folks who like Germans; Skoda is for Eastern Europeans who don’t like Germans; and SEAT is for Mediterraneans who don’t like Germans. What’s the problem?

    • 0 avatar
      Lampredi

      I don’t think so – why do you think Skoda sells at all? It’s because people realize that they get *German* technology on the cheap.

    • 0 avatar
      dejal1

      Europeans remember what past?

      I seem to remember that Italy had something to do with WW2 and the Spaniards were on whose side?

      Spain + Italy has no reason to point to Germany. They have enough history themselves.

      I suppose that everyone in those countries today had relatives that were partisans fighting for freedom.

    • 0 avatar
      BobAsh

      I am from Eastern Europe. In fact, I’m from Czech Republic, home country of Škoda. And guess what? Mostly everyone who has a Škoda would rather have a Volkswagen, if he had the money. Or Audi, BMW or Mercedes.

      Eastern Europeans LOVE German cars. Sales of Lexus, Jaguar or American brands are virtually non-existent, but Audis, Beemers and Benzes are immenselly popular. And especially the VW Group stuff is the thing here…

      • 0 avatar
        Tosh

        Who wouldn’t rather have a BMW than a Škoda?! Of course brand status and prestige-seeking also come into play, and VW plays this game perfectly, evidenced by how carefully it positions each brand and models/options within them.

  • avatar
    juicy sushi

    As long as there is Skoda, there is no market place for Seat. Kill the brand, use the capacity as necessary until it can be dumped.

  • avatar
    jeff_vader

    Rumour is in Europe is that VAG are circling Alfa Romeo and if they get that, SEAT will be thrown to the wolves.

  • avatar
    Buckshot

    Seat is a dead brand. They tried to sell it like a Spanish alternative to Alfa Romeo, but it´s just old VW parts.

    • 0 avatar
      CJinSD

      Remember when Alfa Romeo’s workforce wanted to be sold to VW? It seems a bit ironic now. When I lived in the Netherlands in 1984, SEATs were Spanish made FIATs like this one: http://en.wikipedia.org/wiki/SEAT_Ronda

  • avatar
    bball40dtw

    Seat FR-S/BRZ?

  • avatar
    jpolicke

    I thought SEAT was kept around because the Spanish govt demanded domestic auto production. In which case it would be a lot cheaper to rebadge Skodas rather than do its own distinct bodywork.

    • 0 avatar
      Lampredi

      Speaking of which, I believe the new Mk4 Seat Toledo will be pretty much that, i.e. a rebadged version of the new Skoda Rapid:

      http://en.wikipedia.org/wiki/%C5%A0koda_Rapid_%282012%29

    • 0 avatar
      CJinSD

      Does the EU really still allow such protectionist practices when they’re directed against other EU states?

      • 0 avatar
        mike978

        CJ, no they don`t. There is no legal reason for VW to keep SEAT. The Spanish Government couldn’t, legally, do anything. This comes down to a financial and strategic question. Maybe corporate ego as well since they like to think buy brands, not close them.

  • avatar
    DAC1991

    In my opinion, VW should kill the brand or sell it to the Chinese. The main reason people buy Seats, is indeed because they know it’s part of Volkswagen. Would Seat be killed, most of the buyers will opt for a VW/Skoda.
    I’ve seen it at my work. I work, as a student, at a used car dealership. We mostly sell ‘German’ cars, since those are the most popular here in The Netherlands. People easily trade in their Seats to buy a VW/Skoda or the other way around. The reason my father bought a Seat 850 back in the day, was because he knew it was a Fiat. People just don’t buy a Seat because it is a Seat. Even the name is silly (in English).

    The Netherlands alway have been an imported market for Seat (we actually were their first export market, just like we were VW’s…). This year, their sales are down 40 %… (2011: nr. 11, 2012: nr. 18)

    • 0 avatar
      Lampredi

      “In my opinion, VW should kill the brand or sell it to the Chinese.”

      Why do you specifically suggest that VW find a *Chinese* buyer?

    • 0 avatar
      th009

      I very much doubt they’d sell to the Chinese, or anyone else for that matter. The brand isn’t worth that much (certainly far less than Alfa), VW doesn’t need the cash, and they wouldn’t want a potential competitor with one of their former brands.

  • avatar
    Robert Schwartz

    We used to have these debates about Pontiac and Oldsmobile. VW has the same problem that GM did. Too many brands, not enough niches.

    the real issue with SEAT is whether the Euro is going to last. If not the factory will be worth something to VW to build VWs for export to other trash currency countries like the US. If it does, the question is how much would it cost to close the Plant.

    • 0 avatar
      BobAsh

      Pontiac and Oldsmobile had some kind of history and heritage. Seat is just a brand that made other brands’ cars. It’s only own car was the first Ibiza. And that’s not nearly enough.

      It should die.

      • 0 avatar
        Lampredi

        “[Seat]’s only own car was the first Ibiza”

        And that car used Fiat Ritmo underpinnings and Porsche-developed powertrains.

      • 0 avatar
        th009

        SEAT did what it could at the time: used its existing FIAT-based platform, engaged Italdesign for the design and Porsche for the engine.

        The design was tidy, typical Giugiaro work, even if it was a recycled (and rejected) Golf Mk2 design. The engine was better than the previous FIAT engines, but definitely not a stellar one. Using Porsche for engineering is no worse than engaging Cosworth or Lotus, though, as far bigger companies have done.

        It wasn’t an awful car, but it looked more fun to drive than it really was. I remember driving a Mk1 Ibiza SXi (I think) back to back with a Mk2 Golf 1.8 (90 hp non-turbo). The Ibiza was no more fun to drive, and the Golf was far more civilized.

        The VW takeover ended that before it really even started, though.

  • avatar
    Pch101

    VW began to acquire SEAT in 1983, at a time that other automakers were vying to acquire it. The Franco government had recently gone, which made Spain look like a very promising market. Meanwhile, the EU “single market” did not yet exist and the Eastern Bloc was still a reality, so buying a domestic producer seemed attractive and there was no cheap labor pool in Eastern Europe to serve as an alternative.

    Obviously, a lot has changed since then. SEAT does seem to be less relevant.

    Perhaps it should be reduced to a model or two, and gradually blended into Skoda. Or in the alternative, perhaps they could do something similar to Vauxhall and Opel, and just rebadge Skodas that are sold in Spain (and possibly Portugal) as SEATs. But I haven’t followed it closely enough to know the implications of either of those alternatives.

  • avatar
    rnc

    Spain is the fourth largest economy in the EU (a not very healthy one currently), however as VW is one of the few companies w/o capacity issues in Europe, keep it. There has to be some pride in Spain of having their own brand.

  • avatar
    cacon

    The only countries were SEAT is popular are Spain, Portugal and Mexico; non of these countries have a big enough car market to keep SEAT afloat. Right now the bet for the brand is in China and it doesn’t seems (currently) to be selling well.

    • 0 avatar
      DAC1991

      That indeed is a big problem for Seat. In Portugal, sales are down 73 % YTD, in a market that’s down ‘only’ 41 %. It is nr. 13 with a mere 1759 sales… Spain: only 4 times Seat managed to place one of its models on the nr.1 spot since 1984, in it’s homemarket…! The Ibiza is nr. 1 this year, but Seat is only third (-22 %, market -10 %, 38 000 units), behind VW and Peugeot, with Renault, Opel and Ford just behind it. Seat is in the green in Germany this year, but way behind Skoda. I’m surprised that Seat is a top 10 player in Mexico though, especially since they don’t sell sedans, but only hatchbacks.

      • 0 avatar
        cacon

        The Ibiza is SEAT best seller here in Mexico, by quite a big margin, it’s very popular among the young who can afford their first new car, even if money comes from mommy and daddy. 1st Gen Leon was quite popular too, but the 2nd gen design lost many fans.

        I was quite close to buying it (Ibiza MY10) instead of the Leon (My09), it’s a real looker, but it is too small inside (average for the car segment), since my first and only child was already announced :)

        (who am I kidding, I got the Leon because of the sweet 1.8 DI turbo engine/manual 6 speed tranny, hehehe)

  • avatar
    cacon

    The only countries were SEAT is popular are Spain, Portugal and Mexico; non of these countries have a big enough car market to keep SEAT afloat. Right now the bet for the brand is in China and it doesn’t seems (currently) to be selling well.

  • avatar
    Tstag

    I think VW is gearing up to buy Lotus. It will then rebrand the sporty models at Lotus products in an effort to boost sales in places like the UK where Seat sales are poor.

  • avatar
    djn

    Say what you may about Skoda but the Czechs have a pretty damn good reputation for engineering.


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