2015-2025, the prodigious decade for Seat and Cupra

When Luca de Meo, Wayne Griffiths' predecessor at the helm of Seat, was appointed CEO of the Catalan brand in 2015—ten years ago—Seat was in a very difficult situation. At that time, Seat was a completely loss-making brand, posting losses year after year since 2008, coinciding with the bursting of the real estate bubble that originated in the United States and hit the Baix Llobregat company hard, dragging down three different presidents in six years.

Once he took over the management of the brand, Italian Luca de Meo decided to implement major changes within Seat, and initiated a restructuring and new market positioning that finally led to Seat generating profits in 2015. Thus began a spiral of growth and good financial results that have been halted or reversed by Covid-19, the war in Ukraine, and international instability.

The Italian executive understood like no one else that in the automotive business, the final volume of cars manufactured and registered is not as important as the profit and operating margin a brand earns on each sale, generating a shift in operational culture within Seat. To put it another way, Luca de Meo was the first executive to change Seat's performance indicators, shifting from targets based on the total volume of units manufactured to focusing on the profit margin each unit sold generated. As an example, internal sources within the brand explained that in 2014, each Ibiza sold generated a profit margin of just over €1,000 for Seat, a reality that De Meo transformed. He did so by targeting the SUV segment with the Ateca and Arona (which generate much higher profit margins), making risky strategic decisions such as the decision to discontinue the Toledo (an entry-level model that provided no added value to the brand), and focusing on product quality over the total number of units manufactured.

Luca de Meo also knew that generating a product with high added value that customers were willing to pay a premium for was a complicated task for Seat, and so he created an independent, high-performance, ambitious subsidiary and positioned Cupra as a differentiated brand with exclusive, powerful, and electrified cars. This operation, which the Italian had already tested during his time at Fiat with the creation of Abarth and which he has repeated in France with the Alpine division within the Renault group, marked a turning point in the history of Seat. De Meo had to convince the management of the Volkswagen group to obtain the necessary green light to create the Cupra brand, an operation that was not easy and was only obtained from Herbert Diess (head of the VAG group at the time) with conditions. On the one hand, the establishment of the brand should not entail any new extraordinary expenses for the group and, on the other, that it should not jeopardize the financial stability of the conglomerate in general and of Seat in particular.

The establishment of the high-performance sports division Cupra as an independent brand materialized in 2018 and time has proven that the Italian's gamble has been a business success. Cupra is currently the brand that generates the highest profit margin in Martorell, the one that sells the most outside its borders (9 from each front), has the best brand image and is the best positioned to face the new challenges of electrification with models such as the Tavascan, the Born or the Raval. Josep Maria Recasens, among others, some experts predicted a time of difficulties for the company Seat and the new Cupra seemed to be orphaned of its main supporter, but the leadership of Wayne Griffiths, who continued the development plan initiated by Luca de Meo, continued to consolidate the growth of Seat and Cupra.

"The future belongs to Cupra"

Wayne Griffiths himself has bet more heavily than ever on Cupra. In fact, at the beginning of 2022, the Briton surprised everyone when he announced that "Cupra is not the end of Seat, on the contrary. The future is electric, and Cupra gives Seat a future. The future is Cupra." Beyond Griffiths' statements, the facts seem to make clear what the roadmap is for Seat and Cupra: while Cupra has received new models in recent years, the Seat range has become somewhat aged, without electric, mild hybrid, or conventional hybrid engine options.

Sales figures and operating numbers have proved Wayne Griffiths right, as Cupra went from producing around 22,000 units per year at the Martorell plant in 2020 to manufacturing more than 173,000 units throughout 2024. annually in 2020 to the 239,000 units it manufactured throughout 2024. And it would not be very surprising if in the not too distant future the production of Cupra models surpassed that of Seat.

Beyond Cupra's spectacular growth, it's worth noting that the operating margin generated by each sale of a Cupra vehicle is much higher than that of a Seat: without going any further, a Cupra Formentor is, in reality, a raised Seat León, with a spectacular body and superior technological equipment, but it sells for more than 3. same platform) has a market sale price of around 23,000 euros. The existing market demand means that despite selling a smaller volume of vehicles, Cupra has become a very profitable brand than Seat, since customers are willing to pay up to 10,000 euros more for a Cupra model than if it carried the Seat logo.

Cupra has been a risky bet within the Volkswagen group, because it lacks any kind of homogenizing continuity with any other generalist brand in the group, whose offer does not fit the parameters or customer profile of Skoda, Seat or Volkswagen. Perhaps it would be appropriate to think of Cupra as an aspirational brand, more radical, daring, and sporty than Audi, and even a kind of gateway or entry-level version of Porsche. It's also worth adding that Cupra has been boosted by electrified engines, while Seat maintains combustion engines and affordable prices, and has established itself as the entry-level brand for the entire Volkswagen Group.

Tariffs and Tavascan, a thorn in Griffiths' side

In recent months, Wayne Griffiths has been particularly critical of the tariffs the European Union has imposed on electric cars manufactured in China—it's worth remembering that Seat-Cupra manufactures the Tavascan in China thanks to an agreement with local manufacturer JAC, which we exclusively explained to ARA in December 2017 (30.7%). He has also been critical of the new emissions regulations designed to come into force in 2027, which, according to the British executive, "could lead to massive layoffs" for manufacturers like Seat-Cupra.

Griffiths also spoke out against the Spanish government for its "inaction in favor of electrification," and, as we have been able to confirm from sources close to management, he warned the Volkswagen Group's leadership of the danger posed by opting for the Tavascan, a car that neither sells nor generates the profit margins that the Terramar does. Precisely, his refractory stance on the Tavascan and his concern for the future of Seat—it has been five years since Seat introduced a new model—was the dazzling event that led to the British executive's departure.

His replacement, appointed on an interim basis in March and recently confirmed as the head of the Baix Llobregat company, is German Markus Haupt, until now SEAT's Executive Vice President of Production and Logistics. Haupt is a manager with a strong technical profile, who has led the Volkswagen Group since 2001, is highly regarded within the group, and is close to Volkswagen CEO Oliver Blume. He is also familiar with the Mediterranean culture, having studied business management in Barcelona and spent much of his career at the Volkswagen plant in Palmela, central Portugal, and in Landaben, Navarre, before finally moving to Martorell in September 2022. He is looking forward to continuing to advance the line of work initiated by Luca de Meo and Wayne Griffiths, with the best commercial and industrial results in SEAT's seventy-five-year history, with an operating profit of €633 million. However, it will also have to face a new horizon filled with uncertainties, such as the industrial difficulties facing its parent company, Volkswagen, in Germany, and the trade and tariff war the Trump administration intends to launch with European manufacturers.