VW Is Hurting Too: Spanish Subsidiary Seat Imploding
Most Americans don’t know this, but Volkswagen has too many brands. Volkswagen, Audi, Seat, Skoda, Bugatti, Bentley, and Lamborghini. Bugatti, Bentley, and Lamborghini are in their own category. In the mainstream though, VW has four brands competing with each other throughout the European markets. They subsist somehow for three reasons. (1) While the bulk of Audi’s sales come from 4-cylinder A3s and A4s, they are a player in the luxury market. (2) Because of regional favoritism (i.e. the Spanish buy Seats because it was once a Spanish company). (3) Pricing and brand stigma. VWs are more expensive, but a respectable car brand. Seats are unusual outside of Spain and Italy, are priced cheaper than VWs, and tend toward weak interiors. Skodas are still the butt of jokes from when the company cranked out stereotypical Eastern European cars. All good? No. The model isn’t working. Spain’s economy, which has been seriously hurting ever since 1588 they went on the Euro, is getting slammed even worse right now. Sales across Europe are down, and Spain is taking it very hard. “I don’t think the Spanish market will recover, given everything that’s happening,” Seat President Erich Schmitt told Spain’s Expansion newspaper. While Automotive News Europe says VW has no plans to close or sell Seat – down 22% this year – that’s what they always say. Until they close or sell it. TTAC won’t be chronicling this story in close detail, but Seat is on European deathwatch.
Immensely bored law student. I've also got 3 dogs.
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@sonic_bang First of all, let's start with saying that Daihatsu just sells a bunch of (very) small cars to the elderly due to taxing reasons. It's a niche player and it does that well. Honda on the other hand is a well respected brand in the Netherlands, however, as charly already mentioned, the high taxes do have an influence on the car choices people make, and on top of that, the biggest car segments in terms of volume in the Netherlands are the B (Honda Jazz=Fit) and C segment (Civic), and the D segment (company leases) is important too (Euro-Accord=Acura TSX). Problem is, eventhough the Jazz and Euro-Civic are nice products by any means, those segments are infinitely more competitive over here compared to the US and moreover, brands that aren't to good at making bigger cars make very competitive models in the smaller cars market, that appeal more to a younger audience (Peugeot 207, FIAT grande Punto, Renault Clio etc etc). The same goes for the Civic; in the US you have the Mazda3 and the Rabbit, but in Europe you easily have close to 10 serious options in the C-segment to choose from, with infinite engine and body-style options (which Honda doesn't do) on top of that. Then the D-segment is probably a about 90% lease (ie diesel, which for a long time the Japanese didn't offer)-market, and it's dominated by the Germans, because eventhough on paper they would be more expensive to buy (and therefore, have more status) the leasing prices are relatively low because they have such good trade-in values. The trade-in values obviously are created by the market, which brings up another point. In the US; Honda and ToMoCo's big selling points are reliability. However, in Europe, this is much less the case. It is common knowledge Japanese cars are usually more reliable, however, perceptionwise they are not way better than the Germans (VW still has an image of reliability over here). On top of that, Japanese cars are more expensive to maintain over here, and parts are way more expensive. In other words, operating costs are higher or at least perceived as being higher despite the reliability. Reliability is just generally much less of an issue over here for some reason, except when it is clearly negative (which is why the French and Italians can't sell huge numbers of bigger cars in other countries than France and Italy) but much more important is image and also very important, interior materials...
@charly and JJ Thank you very much for your answers.. So, major Japanese manufacturers don't do well in Europe mainly because they are more expensive to maintain than their European counterparts. Good to know. I guess Asian manfufacturers to be successful in Europe, they better be really good like Toyota or really cheap like Suzuki/Daihatsu and the Koreans.