By on March 26, 2013

1 million units a year. That’s going to be the minimum volume necessary for car makers to survive, if you believe SEAT boss James Muir. His struggling brand sold just 320,000 cars last year, and their exposure is largely limited to economically ill countries in the sunny areas of Europe.

This would be a recipe for disaster for most car companies, but luckily, SEAT is part of Volkswagen. That doesn’t mean their survival is guaranteed, but it does help. SEAT is hoping that the new Leon C-segment hatch, as well as an upcoming MQB-based rival to the Nissan Qashqai, will help increase their overall volume. But it’s hardly a done deal.

In an interview with Autocar, Muir outlined the brand’s predicament

“We have to bring volume to the table as well as profits…in the short-term that means the investment we have received for the Leon family needs to translate into sales. Then every bit of investment we get thereafter needs to pay off. With that, we can shout louder within the Volkswagen Group to get more investment.”

With Volkswagen and Skoda crowding the low end of the marketplace, it’s tough to rationalize why Seat even needs to exist. While the brand has traded on sporty products like the Leon and Ibiza Cupra, the Qashqai rival, sold at an appealing price point could end up being the brand’s savior.

 

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29 Comments on “SEAT’s Survival Depends On Volume, Crossovers...”


  • avatar
    schmitt trigger

    SEAT, like many other Spanish companies and banks, are also betting heavily on Latin American countries for profits.

    • 0 avatar
      th009

      Quite true. Some 20% of SEAT sales are outside Europe, primarily in Latin America.

      And Germany alone is now about 25% of SEAT sales, higher than Spain. Really, southern Europe now accounts for well less than half of SEAT sales.

    • 0 avatar

      I think SEAT is big only in México. They have no presense here in the South Cone. VW tried a couple of times, it never took off.

      As musch as it saddens me to say so, cause it’s always sad when a brand dies, I agree with you Derek as I think very few people, even enthusiasts, would notice

    • 0 avatar
      Athos Nobile

      I don’t think that’s the case… cars wise.

      If it is, good luck with that.

  • avatar
    european

    Derek FAILS again to provide the readers with a meaningful analysis.
    But then again ultimately it’s Bertel’s fault for either not teaching him the right way or firing him.

    anyways, here is whats happening:

    in 2010-2011 Seat had only ~200,000 sales/annum (similar to Mercury’s final year). Marchionne was begging that all of the europeans carmarkers take a hit, everyone should have downsized and everyone survives. I believed at that time that VW will be the bigger men and agree to Marchionne’s plea by shutting down Seat. That would have given PSA/Renault & Opel some breathing room as they are brand-wise Seat’s direct competitors.

    But oh no, boy was i wrong. VW used Seat to bleed the competition even further. It doesnt matter to them (VW) if Seat is loosing money here and there, because others are bleeding even more, hence PSA’s last years “bailout” thru the financing banks.

    so, to conclude, it doesnt matter if the CUV is a big success or not.
    or if they sell 1 million cars per year. Seat will stay just so the VW board can shove that 6-finger fist up the competitors you know what.

  • avatar

    Maybe someone with experience with the SEAT/VW/Skoda offerings can elaborate, but how different does a SEAT feel from a VW from a Skoda, especially the ones built on common platforms?

    There’s a fine line between exploiting your ingenious MQB architecture to make many very different cars, and falling into the GM (and others) N-platform trap of selling one car with three choices of nose, tail, and instrument panel.

    As part of that, does SEAT really need to sell a million cars? If they’re just variations on the MQB, they can ride the coattails of that massive volume of chassis bits and engines, and the only question is whether you need to sell a million cars to justify the separate marketing efforts for VW and SEAT and Skoda (and Audi?) in some markets.

    • 0 avatar
      nvdw

      I’m sorry for such a lousy answer, but I think “poor man’s Audi” says it best.

      • 0 avatar
        corntrollio

        Literally, if I remember correctly? I believe they moved the tooling for the B7 Audi A4 from Ingolstadt directly to Spain when they switched to B8 production.

    • 0 avatar
      mike978

      I had a SEAT Ibiza back in 2001 and the best way to describe the differences between the Polo (VW), Fabia (Skoda) and Ibiza is that the Ibiza was sportier in design (inside and out), but a little lower in materials quality compared to the Polo. The Fabia was of the same quality as the Ibiza but more conservatively styled. So both are sold as cheaper alternatives to the VW, but with the same engine range and then differentiate on styling and perceived sportiness.

      If I was to buy one know I would go for the Skoda because they have evolved a nice styling design. I am surprised the Skoda’s have vRS models which compete with GTi’s (VW) or FR/Curpa models (SEAT). I would have kept the sportiest models for SEAT and VW only.

  • avatar
    TR4

    “1 million units a year. That’s going to be the minimum volume necessary for car makers to survive, if you believe SEAT boss James Muir.”

    I’ll bet the chaps at Morgan don’t believe him!

  • avatar
    haudit

    There’s actually a considerable degree of difference between how Volkswagen, Skoda and SEAT products feel. Skodas tend to be focused more on comfort and practicality, and less on handling and performance. They have a robust, durable, no-nonsense feel similar to Volvo.

    SEATs have always been focused more towards the enthusiast end of the mainstream market, routinely churning out ever hotter versions of the Ibiza and Leon.

    Nearest I can make out, Volkswagen is content to split the difference between its two lower-tier brands, being neither as comfort focused as Skoda, nor as performance oriented as SEAT.

    On the matter of volume, Skoda is seen as a massive success by the VW Group, and it doesn’t manage to sell 1 million units a year, so I see no reason why the more niche SEAT brand should expect to sell that many. Maybe 500,000 per year, but certainly not 1 million.

  • avatar
    Augie the Argie

    What are the chances for SEAT to become VAG’s low cost brand?

    They could exploit their Latin America’s positive brand image for their re introduction into South American markets and worldwide factories to produce them.

    I personally always liked SEAT but as of late their designs have become controvertial i.e. Altea, latest facelifts of both the Toledo and Ibiza models. Adding a small SUV or CUV would help the cause of survival. Finally, I think Spaniards sense of pride would take a hit if SEAT dissapeared, however, a victory of La Roja against France played tonight at the World Cup qualifiers might certainly help…

    • 0 avatar

      That would be an interesting concept, but I’d defer to Bertel on making any predictions about that.

    • 0 avatar
      hreardon

      I would argue that when SEAT and Skoda were brought on board it was a bit of a defensive play by Volkswagen to get a toe hold into these markets in the early 80s and early 90s. It was also a great way to get some factories in lower-cost countries on the cheap.

      That said, today the market is decidedly different than 1980 or 1990. If anything, Seat gives VW a little additional volume over which to amortize development and purchasing costs. I also agree with the sentiment expressed earlier that VW has used SEAT as a way to club the unhealthy members of the European auto industry: it may bleed, but it bleeds a lot slower than Renault, Alfa, FIAT, Citroen, etc…

    • 0 avatar
      Magnusmaster

      That could work on the open markets in Latin America. On Argentina, Brazil,or other protectionist countries, forget about it. VW has its own low-cost Volkswagen models in Brazil which make Seats and Skodas look like a Mercedes by comparison. The VW Gol is way more basic than even the up! or its rebadged Skoda and Seat siblings, let alone a Skoda Fabia or a Seat Ibiza.

  • avatar
    stroker49

    VW makes the same misstake as GM has done for 40 years. Lots of brand engineering. They make too fine Skodas for the best of VW and Audi. Shouldn’t Skoda bee a good economical car? Why are they making the Superb? It cannibalize on Passat. Why so nice VW, it hurts Audi. And Seat, what should it be? VW’s Pontiac? Young and sporty but why make a Skoda RS then? If they need the capacity it would be better producing some of the other brands in Spain and wind down Seat.

    • 0 avatar
      mike978

      I agree with your point but back in the 90′s when Skoda was brought on board the desire was to move upmarket. Just as VW was doing (starting with Mk IV Golf). If they were to do it all again in todays environment then I am sure Skoda would have stayed a very cheap brand to compete with Dacia. But remember Dacia is a new phenomenon and nobody was really predicting before say 2007 that it would be a big success. The thought was to move upmarket was necessary.

  • avatar
    BobAsh

    The sentence about Volkswagen, Skoda and Seat crowding the low end of the Europe’s marketplace shows how little Derek knows about European market.

    So, let me, as motoring journalist from Czech Republic (country where Skodas are built and have HUGE market share), shed some light on the subject:

    Volkswagen is nowhere near the bottom of the European market. Don’t forget that US Volkswagens are heavily decontented vs. the European ones – ours are a more upscale than Opels and at least on the same level as Fords. VW and Ford are slowly moving into the strange “sub-premium” territory, formerly occupied by Saab and Volvo.
    You can imagine the Volkswagen brand as VAG’s Buick.

    Škoda doesn’t compete with Volkswagen much, as Škodas are usually bigger and more practical, but cheaper versions of VW’s on the same platform. For example, Octavia, built on the Golf platform, is nearly as big as VW Passat, but it costs as much as a Golf. Superb costs a tiny bit more than Passat, but offers space more like Audi’s A6. You buy Škoda if you need a big car, but can’t afford the VW. The difference in equipment and technology is small, but in image, it’s noticeable.
    Škoda is VAG’s Chevrolet.

    (to put it in further perspective – VW is slightly more upscale in EU market than Opel, which is de facto Buick, and Škodas are more upscale than Chevrolets – about the same margin)

    In this scheme of things, Audi, of course, represents the Cadillac, which works.

    And Seat represents Pontiac. Wannabe-sporty brand, offering tarted up Škodas (Chevrolets). The problem is, Seat has no history with sports cars (unlike Škoda), or, in fact, no history at all. Imagine Pontiac in the 90s, without the memory of GTO, Firebird, Grand Prix or any other great car in their history.

    That’s Seat. And that’s why it’s going to fail.

    • 0 avatar

      Ridiculous. I know full well about VW Group’s positioning – I’ve talked to Bertel every day now for hours at a time. I know better to imply that VW is on a level with Dacia.

      • 0 avatar
        tinoslav

        Derek, it is quite foolish to say that VW (or even Skoda in the central eastern Europe) is at the low end of mainstream market. I should probably know better since I live in Europe (Slovakia)and owned a Skoda and a SEAT. BoBAsh is completely right. The truly lowend of the mainstream market here in Slovakia is Renault and Fiat. Skoda´s are actually even more expensive than SEAT (due to a high market share as a domestic brand) and VW is one of the most expensive if not the most expensive mainstream brands (apart from the Japanese brands).

        With regard to SEAT, I would miss the brand if it would vanish. My Leon was so fun to drive. The old Audi parts together with a very stiff suspension made the car drive like on rails. Less room than a Skoda, less expensive but less comfortable ride than VW and nice MPV´s (the Altea and Altea XXL). That is the SEAT identity.

      • 0 avatar
        BobAsh

        I would never accuse you of comparing VW with Dacia – I think you lack knowledge, not that you’re stupid.

        As tinoslav mentioned – even Skodas can’t be compared with Dacia. Skoda competes with Renault now, and in Eastern European markets, Skodas are in fact significantly more expensive than Renaults or PSAs.

        Volkswagens compete directly with Ford only. Opel tries, but usually fails, to compete on the same level. On the other hand, some Volkswagens can compete with Volvos very successfully.

        Basically, only premium brands are above Volkswagen.

        • 0 avatar
          nvdw

          Also, with Skoda and Seat, Volkswagen purchased infrastructure as well in ‘new’ areas (Eastern Europe and the Iberian peninsula respectively): dealer networks and production facilities.

          The problem is that both of Seats primary objectives (provide affordable cars for Southern Europeans and be some sort of My First Audi for the rest of Europe) have been rendered impossible now Spain and Portugal (the home market) are in deep financial straits and Audi has taken up the task of providing an entry-level model themselves.

      • 0 avatar
        HerrKaLeun

        Derek: I think your article is great, but on Skoda I have to agree with tinoslav and BobAsh. VW may position Skoda elsewhere, but the consumers place Skoda at the same or even above level as Opel/Ford.

        In the 1980s Skoda had the best most Western car (Favorit) and also had the most capable production/development team. Which is why VW took them over. Opel snatched Wartburg (brand was dissolved), VW also snatched Trabant factory (brand dissolved) and Renault Dacia.

        their cars are so good that VW needs to artificially harmstring them to not endanger VW or even Audi.

        I think your article is fine, and is about Seat (how did we get to Skoda?). Good job, i always like your articles even if i don’t comment often.

        My personal (statistically not relevant) ownership experience is with Skoda, Seat and Opel. The Opel was more often in the shop than on the street.


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