VW Giving "Spanish Pontiac" One Last Chance

Edward Niedermeyer
by Edward Niedermeyer
vw giving spanish pontiac one last chance

Whenever TTAC took GM to task for branding run amok and excessive platform sharing, the example of Volkswagen has always been the key counterfactual. With seven brands available in Europe, the Volkswagen-Audi group is the continental GM, always looking for another way to repackage a pedestrian FWD platform. The only difference is that VW has actually been growing. But Wolfsburg’s brand profligacy is starting to bear some GM-style bitter fruit. Skoda has been surprisingly strong of late, actually making problems for the Volkswagen brand in certain markets. Seat, on the other hand, is not doing so well. With only one factory, at Martorell, near Barcelona, Seat has always been a slightly niche player, offering older VW designs with some Pontiac-style “emotional” styling flair and a sportier image. The problem now, as Seat CEO James Muir tells The WSJ [sub], is that

The brand really is too small for this plant

Running at only 60 percent of its 500,000 unit capacity, Seat is too small for its lone plant. As a result, VW is launching a last-ditch effort to save its dying brand.

And make no mistake, the rescue of Seat is a last-chance effort. Muir explains

I think this is the last attempt for the brand. It wouldn’t make sense to think something else. If one would want to get rid of Seat, one would have to give the other party money to take it.

Seat lost about $430m last year, as sales dropped eight percent to 337,000 units, according to BusinessWeek. So, what’s the problem? The European market is projected to contract this year, and Seat isn’t just VW’s weakest brand… it’s one of the weakest brands in Europe. Sales in Seat’s main market, Spain, fell 21 percent last year, and the other Southern European markets where Seat is popular haven’t fared well lately either. And outside of being a Volkswagen for those vulnerable Mediterranean markets, it’s not clear what Seat is supposed to mean to anyone else. Mike Tyndall, an automotive analyst at Nomura Securities in London, explains

It seems to me that VW hasn’t fully committed itself yet to the brand image of Seat. At some point they wanted Seat to be the sporty brand within the VW family, but some of the model decisions don’t add up

So what’s the plan to rescue this weakened and increasingly irrelevant brand? According to CEO Muir

Our clear focus over the next three years will be to improve utilization. One cannot solely rely on cost reductions to make Seat profitable

That means building the Audi Q3 compact crossover in Martorell, and boosting sales of Seat’s Golf-based Leon from 75k units to 200k units by adding more variants. Currently at nine models, Seat plans on increasing its number of nameplates to 40 by 2018. More fleet business is also in the cards.

And though overcapacity of the kind that’s bringing down Seat is a distinctively European problem, the brand’s troubles are more than a little reminiscent of Pontiacs. Skoda competes with Seat in the budget-VW category, and does so consistently better across Europe. Seat is supposed to be the “sporty Volkswagen” brand, but it must compete with GTIs and Skoda RS models. And despite struggling with geographic limitations to its appeal, VW thinks it can solve the brands problems by boosting volume and nameplates. As we all know by now, taking a sporty brand into the mass-market with more models and more fleet sales is a classic technique for destroying its last vestiges of authentic appeal. Just ask the Pontiac G6. Keeping Seat alive is just another step for Volkswagen down the path towards General Motors-dom.

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  • Buckshot Buckshot on May 13, 2010

    Seat has some attractive models, on the outside. The interiors on the other hand are depressing. It is a plain, cheap and ugly looking place. To get it more "sporty", the gearing is lower than VWs.

  • Galne Gunnar Galne Gunnar on May 14, 2010

    I think the Altea and Leon look just fine! Should we discuss matters of taste? (No.) Seat could have just the right sporting image, if they made them drive like Peugeots used to (205, 206, 306, 406... ), for example.

  • JamesGarfield What charging network does the Polestar use?
  • JamesGarfield Re: Getting away from union plantsAbout a dozen years or so ago, Caterpillar built a huge new engine plant, just down the road here in Seguin TX. Story has it, Caterpillar came to Seguin City council in advance, and told them their plans. Then they asked for no advanced publicity from Seguin, until announcement day. This new plant was gonna be a non-union replacement for a couple of union plants in IL and SC, and Cat didn't want to stir up union problems until the plan was set. They told Seguin, If you about blab this in advance, we'll walk. Well, Seguin kept quiet as instructed, and the plan went through, with all the usual expected tax abatements given.Plant construction began, but the Caterpillar name was conspicuously absent from anywhere on the site. Instead, the plant was described as being a collective of various contractors and suppliers for Caterpillar. Which in fact, it was. Then comes the day, with the big new plant fully operationa!, that Caterpillar comes in and announces, Hey, Yeah it's our plant, and the Caterpillar name boldly goes up on the front. All you contractor folks, welcome aboard, you're now Caterpillar employees. Then, Cat turns and announces they are closing those two union plants immediately, and will be transporting all the heavy manufacturing equipment to Seguin. None of the union workers, just the equipment. And today, the Caterpillar plant sits out there, humming away happily, making engines for the industry and good paying jobs for us. I'd call that a winner.
  • Stuki Moi What Subaru taketh away in costs, dealers will no doubt add right back in adjustments.... Fat chance Subaru will offer a sufficient supply of them.
  • Dartdude Lorenzo, the reason for low manual transmission here is that most dealers won't stock them. I wanted a 2012 Kia Koup with manual tranny it was available, but no dealers ordered any from the factory hence there was none available. Go on any car manufacture's web site and price and build and build your model and you would be lucky if the model existed and was available.
  • The Oracle Good news is that based on the model years many of these have already been junked or experienced terminal engine failure.