Seat remains the only unprofitable brand in the Volkswagen Group

Article by Christian Andrei, on August 13, 2012

Spanish car brand Seat is, once again, the only brand owned by the Volkswagen Group that is losing, according to the quarterly results unveiled by VW last July 26. VW’s four other main car nameplates have been profitable. Seat is affected by the sales slump in Spain where car registrations have been declining for over two years now.

Seat’s figures are surely not appreciated by VW, which has been aiming to become the most profitable automotive group in the world. VW continues to bear the worsening debt crisis in Europe even as its rivals struggled, including PSA/Peugeot-Citroen, Ford and Fiat. VW has reported bigger profits and record-breaking deliveries while at the same time, its production capacity has been growing in China and Russia.

Since 2008, Seat has incurred a total of around 1 billion euros ($1.24 billion) of losses since 2008. In fact, it has only been profitable in just one of the past 10 years. Nevertheless, VW appears bent on repairing the automaker despite having received recommendations that the Spanish unit has to be closed down. Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, said that there’s no doubt that Seat is the “black sheep” in its family.

He added that what would make sense is to discontinue the brand and have other group brands utilize its facilities. Dudenhoeffer, who used to be a PSA official, said that Skoda (a reliable mass market brand) offers models in the same compact to midsize segments. He said that this leaves no reason to keep Seat.

In 1986, VW bought Seat to widen its exposure to the Spanish market. For several years, it has been making attempts to overcome losses that resulted from the underutilized capacity at Seat's main factory in Martorell which could produce 500,000 vehicles annually. The output in 2010 is lower than 2000 by nearly a third to 345,000 cars. [source: Automotive News - sub. required]

Topics: seat, vw, profit

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