Spanish shame: why VW decided to get rid of the Seat brand
Volkswagen's difficult financial situation forced the company's management to begin an "inventory" of the brands included in the concern. The first victim of this optimization will be the Spanish Seat brand. This is a necessary measure necessary for the company's recovery, experts say. At the same time, they do not exclude the refusal of the German concern from other brands owned by it. Details can be found in the Izvestia article.
The first one went
The management of the Volkswagen concern has decided to close the Spanish Seat brand owned by the automaker. This is reported by the German edition of WirtschaftsWoche, referring to the report of the Supervisory Board of the company, approved by the board of directors of the Volkswagen Group. Seat models are no longer mentioned in the strategic plan of the concern until 2030.
As follows from the document, the Spanish brand will be "systematically and economically eliminated no later than the end of 2029." At the same time, the company will continue to support Seat customers by providing car service.
The management of the German carmaker was pushed to such a step by the difficult financial situation of the company. According to the results of the third quarter of last year, Volkswagen Group's profit decreased by 58%, and the operating loss exceeded €1.3 billion. The elimination of Seat, which has been in existence since 1953 (part of VW since 1990), should reduce the investment burden on the German concern.
This measure, along with plans to reduce the number of VW plants in Germany — the first VW plant in Dresden closed at the end of last year, and production at four more will be discontinued by 2031 — are designed to stabilize the company's economic situation.
It is noteworthy that the concern decided to leave the Cupra brand, which spun off from the Spanish brand. Moreover, the company plans to annually produce 500-600 thousand cars under this logo.
According to Carlos Cuerpo, First Vice President and Minister of Economy of Spain, the government will make all necessary efforts to preserve the Seat.
Not up to fat
The decision to liquidate the Spanish brand is painful for Volkswagen, experts say. But it is necessary for the financial recovery of the company, they emphasize. Seat cars have always been niche models and their sales were lower compared to cars of other brands of the company, said Igor Morzharetto, partner at the Autostat analytical agency. Despite the platform shared with other models of the concern, the development of this brand still required investments in design and marketing-related developments, he explains. At the same time, Seat cars are more in demand in the markets of southern Europe — they are less popular in other EU regions.
— In the past, when the financial condition of the Volkswagen group was stable, the company could afford to keep almost one and a half hundred models in its portfolio, including niche and similar models. Now, when the concern is in a serious crisis, it is already an unacceptable luxury. To reduce costs, the brand that generates the least profit was chosen. It turned out to be a Seat," Igor Morzheretto told Izvestia.
In his opinion, the disappearance of this brand will not lead to any global changes in the global car market. He recalled that over the past 10-15 years, a number of notable car brands like Oldsmobile, Pontiac, and SAAB have disappeared. Other, stronger players took their place, Igor Morzharetto noted.
Unlike other models of the concern, Seat cars are known only on the European market, and their export potential is minimal, says automotive expert Peter Bakanov. This could also be one of the motives that prompted Volkswagen management to remove the brand from its portfolio, he believes.
— Practically no one knows anything about Seat in China, the USA, or other markets. But Audi or Voklswagen are known all over the world. Given the fact that the company needs to increase the export of its cars, it is irrational to invest in the promotion of an unknown brand in the current conditions. As well as continuing to promote this brand only for a relatively small number of potential European buyers," says Peter Bakanov.
The elimination of the Seat brand will definitely not affect the Russian market, experts believe. These cars were sold in scanty quantities in Russia, the Spanish company officially left Russia back in 2015, and the number of Seat cars on our roads is minimal, they note.
From Germany to Spain
The refusal to release Seat does not mean the closure of the factory near Barcelona, says Maxim Kadakov, editor-in-chief of Za Rulem magazine. This modern and large enterprise may well be used by the concern to produce cars of other brands, he believes.
— After the expected closure of a number of VW plants in Germany itself, the production of some models that were assembled there may well be moved to Spain. Taking into account cheaper labor and a less active position of trade unions, this can reduce the cost of car production. That will also be a plus in the current situation of the concern," he told Izvestia.
As for the prospects of other brands, according to experts, brands such as Volkswagen, Audi, Skoda, Porsche, Lamborghini themselves are not in danger — the concern is unlikely to abandon them. However, if VW's financial situation does not improve, the management may decide to focus on production primarily of passenger cars. In this case, the prospects for non-core assets like the Ducati motorcycle brand or the cargo segment with the MAN and Scania brands may be vague, Maxim Kadakov believes.
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