VW might be targeting Seat to cut some of the Group’s costs image

With the never-ending scandal, VW’s costs are not at all negligible and the Group has to look in all directions to collect cash. And Seat might be a target.

Volkswagen bought Seat two decades ago intending to increase its market share in southern Europe and to cut some its production costs by securing a more economically-priced plant location. It was group’s first brand expansion outside of Germany. But the last seven years were not at all profitable, with a total deficit for Seat of 1.39 billion euros, with a 40-million-euro deficit only in the third quarter of 2015. It sold fewer cars than the VW brand in its home market this year. In October, its registrations fell 2.7 percent, making it the fifth-place brand, according to Spanish car- and truckmakers’ association Anfac.

With billions of euros spending over the emission scandal, Volkswagen is targeting Seat to cut some costs, as the Spanish brand may be a more politically expedient place to cut than in Germany. “You’re just left wondering what will happen, whether investment will come and whether jobs are secure,” said Javi Garcia, 40, a second-generation assembly line worker at Seat’s sprawling factory in Martorell, west of Barcelona.

The new VW’s CEO, Matthias Mueller, has to find ways to cover the costs. He said Volkswagen will take a hard look at the group’s more than 300 models and cut the worst performers. That could affect Seat models like the Alhambra minivan and Mii city car. The sales volumes for the Mii are a fraction of its sister models from VW, and the Alhambra sells about half as many vehicles as the almost identical but more expensive VW Sharan.

Via Bloomberg