Volkswagen puts the Seat brand at stake

BarcelonaThe Volkswagen Group's supervisory board approved the company's restructuring plan this Friday evening, which will involve the elimination of 50,000 jobs in Germany and the possible closure of four factories in the country—Emden, Zwickau, Hanover, and Neckarsulm—by 2030. The meeting's resolution was expected for this Friday, but the company advanced the result on Thursday evening. The group, however, did not explain tonight what the future of the Seat brand, controlled by Volkswagen, will be. The CEO of the Volkswagen Group, Oliver Blume, in a statement, celebrated the unanimous approval of the restructuring plan as a "decisive" signal for the company's future and announced million-euro investments for the coming years. The supervisory board includes representatives from the founding shareholder families, unions, and the government of Lower Saxony.

The emergence of the electric car and the rise of competition from Chinese brands have impacted the German group, which hopes to address the new sector landscape with this restructuring. The executive committee will push forward the "necessary measures" and states that it will do so "in collaboration with the brands, subsidiaries, and worker representatives." Volkswagen admits that current European production capacity exceeds demand by more than 500,000 units.

But as a consequence, Volkswagen's restructuring could mark the future of the historic Spanish brand Seat, controlled by the German group. The group is considering eliminating the Seat brand "at the latest" by the year 2029, according to an internal document accessed by the German weekly magazine specializing in economy and business WirtschaftsWoche.

"The Seat brand will be withdrawn in an orderly manner and with cost optimization, at the latest by the end of 2029, while guaranteeing support for existing customers—for example, service—and compliance with current obligations," the report states, which was approved by the entire Volkswagen Group board of directors, according to reports.

Reactions were not long in coming. Seat indicated this Thursday that nothing has been decided. For its part, the company's works council has requested the involvement of Spanish administrations to defend the historic Spanish brand, which has more than 70 years of history. According to some sources, the decision would only affect the Seat brand, not Cupra, which also depends on the Spanish company of the Volkswagen group.

The disappearance of the brand should not affect the Martorell plant either, which employs about 15,000 people. However, the site would need to be equipped with new models if the Seat ones disappear. Currently, the Seat Ibiza and Arona models are manufactured on one line in Martorell, the León models (both Seat and Cupra) and the Cupra Formentor on another line, and the Cupra Raval and the Volkswagen ID. 2all (Volkswagen Polo ID) on another, the latter two being 100% electric. To maintain the viability of the factory – where more than 300 million euros have been invested for electrification – both Seat's management and the works council have long been asking the group for the allocation of a second electric platform.

In fact, the Seat brandhas not launched new models on the market for some time and, in recent years, has only presented updates to models such as the León, the Ibiza, and the Arona. In contrast, Cupra's last few years have been marked by the launches of the Formentor, the Tavascan, the Born, the Terramar, and, most recently, the Raval.

The Seat works council considers it "unacceptable" that the historic Seat brand could potentially disappear, and therefore calls on Spanish public administrations to prevent it. The president of the Seat works council, Matías Carnero (UGT), referred to the publication of the weekly magazine WirtschaftsWoche.

Carnero recalled that Seat's electrification has required 10 billion in investment and that this plan has also involved public funds, which is why "if the brand were to disappear, someone would have to hold the German consortium accountable." "If this were true, a plan B would need to be set up to seek an alternative" to the hypothetical disappearance of the Seat brand, he told the company. In this context, Carnero has insisted on the importance of obtaining a second electric vehicle platform at the Martorell plant.

Matías Carnero is part of the Volkswagen Group supervisory board, having assumed this position as a representative of the German trade union IG Metall. Carnero has assured that he will ask the group's executive committee for explanations regarding the veracity of this information, as if this news were true, it would mean "putting a target" on the Seat brand within a period of just three years.

For its part, Seat has stated that the Volkswagen group is undergoing a "profound transformation" with the aim of addressing the sector's electrification process, and therefore everything that affects the Spanish brand depends on the analysis carried out in meetings of the German group's supervisory board: "No decision has been made regarding this," company sources explained to Europa Press.

Future of Volkswagen

"The entire industry, including the Volkswagen Group and, of course, Seat S.A., is immersed in a profound transformation, based on our commitment to electrification. The global context has changed significantly, severely impacting the automotive sector, especially in the last year," company sources explained.

They add, in this regard, that Volkswagen has approved a business transformation plan for the entire group to strengthen its competitiveness and efficiency and that the goal is to make the entire group "and its respective companies more efficient and agile, and also to systematically leverage potential technological synergies".

This strategy is being debated in different supervisory board meetings, but, according to Seat, no decision has been made on this yet: "We will inform of any strategic decision that affects Seat SA when the time comes," the company maintained.

In fact, on the supervisory committee's table there is already the possible closure of four plants in Germany (three of Volkswagen and one of Audi). What has been confirmed is the elimination of 50,000 jobs in the country, within a worldwide restructuring process that could lead to the elimination of more than 100,000 jobs.