Volkswagen Considers Seat for Cost Cuts Amid Emissions Fallout
Seat faces scrutiny within Volkswagen Group as the company seeks to reduce costs in the wake of the diesel emissions scandal and mounting financial pressures.
Volkswagen Group is reviewing its Seat division as a potential focus for cost reductions, following heavy financial strain from the diesel emissions scandal. The Spanish brand, acquired by Volkswagen in 1986, has struggled to deliver profits for several years and now finds itself under increased scrutiny as the group seeks to shore up its finances.
Seat's financial performance has been a persistent concern for Volkswagen management. Over the past seven years, the brand accumulated a total loss of €1.39 billion, with a €40 million deficit reported in the third quarter of 2015 alone. In October 2015, Seat's registrations in Spain dropped by 2.7 percent, according to the country's car and truck manufacturers' association Anfac, pushing the brand to fifth place in its home market.
Seat models under review
Volkswagen's new CEO, Matthias Müller, has stated that the group will closely examine its portfolio of more than 300 models and cut those that underperform. This review is expected to affect Seat models with weaker sales, such as the Alhambra minivan and the Mii city car. The Mii has sold in much lower volumes compared to its Volkswagen and Skoda equivalents, while the Alhambra's sales lag behind the similar but more expensive Volkswagen Sharan.
The Martorell plant, west of Barcelona, remains one of Spain's largest automotive facilities and a major local employer. Any reduction in investment or production could have a direct impact on jobs in the region, raising concerns among workers about the brand's future within the Volkswagen Group.
Volkswagen's wider cost-cutting drive
No final decisions have been announced regarding Seat's future. However, the brand's ongoing losses and the group's urgent need to contain costs have made it a likely candidate for restructuring or reduced investment as Volkswagen navigates the aftermath of the emissions scandal.
