Seat remains the only unprofitable brand in the Volkswagen Group

Article by Christian A., 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.

Seat is introducing the new and third generation of its Leon small family car – now built from the ground up in order to bring in a new offering that is not only sportily dynamic and emotionally stylish, but also undeniably elegant and full of innovative technologies.

Although the development of the third generation of the Seat Leon was done from scratch, it still boasts of the prime qualities that made its predecessors a big hit among motorists – the combination of driving enjoyment and superb functionality. These are the same attributes that allowed the previous Leons – launched first in 1999 – to be sold to around 1.2 million satisfied customers. In addition, Seat plans to build the new Leon at the site where it built its predecessors at the Martorell facility near Barcelona Spain.

As a small five-door hatchback, the new Seat Leon isn’t just about functionality, but is also about personality. Thanks to an array of technologies fitted in the Leon – like its assistance systems ad infotainment system, it is now more exciting and more enjoyable to drive. Add to the fact that the new Seat Leon is fitted with a lineup of powerful and efficient TSI and TDI engines.

These engines have been proven to be capable of providing ample output while still consuming less fuel and emitting less pollution. For instance, the Seat Leon powered by a 1.6 TDI engine -- with start/stop system –consumes in average 3.8 liters of diesel per 100 kilometers and emits 99 grams of carbon dioxide per kilometer.

Topics: seat, vw, profit

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