Seat’s numbers, both globally and in Mexico, are not exactly spectacular. And its future, said by Thomas Schäfer, Volkswagen’s Director of Operations, is not yet decided, who made it clear that the brand is not going to disappear, but it can go through such a strong change that it can transform it into a mobility company, manufacturing, for example, electric skateboards such as the Mo 125. The fact is that the moment you are living in today is uncertain and this calls into question many things, including the operation in Mexico.
When Cupra was created, Seat stopped being a brand to be a group that encompasses both. Only seen in this way the transformation of Cupra -before a simple sports version of some Seat products– it is fruitful. The numbers show it. From January to September 2021, Seat had lost 159 million euros and in the same period of this 2022, the losses were 10 million euros. Nothing to write home yet, but the trend is clear towards recovery. The locomotive of change is Cupra. The success of the new brand is spectacular and as the profit margin of its products is higher, the importance of Cupra in the results is much stronger. If Cupra is the locomotive, its engine is the Formentor. The crossover Spanish has been extremely well received in all markets where it has arrived. The still-nascent brand sold 74,000 units of the Formentor in the first months of the year and its performance may mean that the end of 2022 is closed with profits, closing the year of recovery mentioned by its Chief Executive, the British Wayne Griffiths.
Seat sold 333 thousand units in the first three quarters of this year, which means 51 thousand units less than in the previous year. The brand was one of the most affected by the shortage of raw materials that was unleashed in the pandemic. Many even consider unfair the distribution of these raw materials, mainly microprocessors, within the Volkswagen Group, but it is the reality with which the Iberian brand had and still has to live.
Avoid internal competition
As it is, according to Thomas Schäfer, Seat may continue until 2028 or 2029, but then it will need to be rethought. ANDn the short term, Cupra is the “new Seat”, it is the one that receives the new designs, the investment and the most recent technology. And this must not change. Seat continues to depend, in Europe, on the sales of Arona, its most successful product, which is the third best seller in Spain, below Dacia Sandero and Hyundai Tucson. But it is no longer updated. It does not have electric vehicles and must change in another direction, be it the mobility mentioned by Schäfer or something else. For many in the VAG Group, it is time to end the internal competition with Skoda.
In Mexico, the Seat brand sold 21,000 vehicles from January to November 2018 and rose to 22,000 in the same period in 2019. With the arrival of the pandemic, it dropped to 19,000 units in 2020. But that 2022 drop is brutal: 10.9 thousand vehicles sold, that is, 43.7% less according to INEGI numbers. These sales include Cupra sales. With such poor results, many dealers are losing money and in order not to continue like this, some would be pushing for the brand’s exit from the market and the arrival of Skoda, which would be new to the market, has products and prices that would fit well with the taste of the Mexican consumer and that is not suffering as much as the Spanish one with the shortagemuch less going through a transformation that threatens its existence, at least in the form in which we know it.
Of course it would be a radical change, it would imply a strong investment in new agencies or in the complete remodeling of the current Seat distributors, but times seem to demand such measures. Cupra, which today operates within some Seat agencies, might need something different if those agencies were to become Skoda sales and service points. The fact is that the businessmen who invested money in the Spanish brand are not exactly happy with Seat’s performance in 2022 and I don’t think they are willing to wait until 2028 or 2029 for things to change. If the future of Seat is Cupra, that future had better be 2023. Or that Skoda comes.