SEAT to Slash Spanish 2012 Production; VW Denies Thoughts of Divestiture
Executive Summary
The contraction of the European car market is forcing SEAT to cut 16,000 units from vehicle production scheduled for 2012. The decision will affect all models assembled at the Martorell plant, near Barcelona.
MADRID – SEAT is revising its 2012 production slate to 380,000 vehicles, down 97,000, or 20.3%, from original targets for the year but still 27,000 units more than in 2011.
The cuts will be achieved by using flexible measures previously agreed to by the SEAT works council. Some Saturday shifts will be canceled at the Martorell plant near Barcelona. The facility also will be closed Oct. 8-11 proceeding a Spanish national holiday Oct. 12.
The most affected model will be the Ibiza, which will lose 7,000 units, followed by the Altea (4,000), Q3 (2,700) and Exeo (2,000), for a total 15,700 units.
Sources at Volkswagen Group, which owns the Spanish auto maker, say SEAT sold 210,200 cars in the year’s first eight months, down 11% from year-ago’s 236,200 units.
The loss is due to the falloff in light-vehicle demand in some struggling Western Europe markets. However, sources say the Spanish brand’s sales have been “very positive” through August in countries such as Germany, up 13.7% to 40,000 units; the U.K., up 4.9% to 23,000; and Mexico, up 21.8% to 13,700.
Rumors VW is considering divesting SEAT were discarded by Volkswagen CEO Martin Winterkorn during a recent meeting of Spanish and German businessmen in Madrid with German Chancellor Angela Merkel and Spain President Mariano Rajoy.
“Volkswagen will continue its close link with Spain in the future,” Winterkorn is quoted as saying during the meeting, noting he understands Spain needs time to solve its sovereign debt problems.
SEAT particularly is suffering from the steep drop in the domestic market, where car sales have tumbled to levels of 40 years ago, he says. However, the Spanish auto maker has adequate product and a management team in place to help it grow once the market recovers.
Winterkorn underlines that the Volkswagen Group represents 25% of the Spanish automotive industry, with a combined 18,000 jobs at SEAT’s Barcelona plant and VW’s factory in Pamplona.
“SEAT will continue being a fundamental piece in our global strategy,” he says.
