MUNICH -- Volkswagen Group may build an SUV for Spanish sister brand Seat at Skoda's plant in Kvasiny, Czech Republic, company sources say.
The model would be produced alongside the next-generation Skoda Yeti compact SUV at the factory, where production costs are significantly lower than at Seat’s plant in Martorell, Spain.
Sales of SUVs and crossovers are booming in Europe, where Seat sells the majority of its cars, but unlike sister brands Skoda, VW and Audi, the Spanish carmaker lacks such a model.
VW Group hasn't approved the SUV for Seat because it is still investigating whether the money-losing subsidiary can afford to add the model.
Seat President Juergen Stackmann said the SUV would be an important strategic building block in the automaker’s product offensive in Europe.
Seat is working on an SUV that would "fit the brand and develop another European sub-segment" for the carmaker, Stackmann told Automotive News Europe's sister publication Automobilwoche.
He said no decision had been made yet on the SUV's production.
Seat’s sales are on the rise since it introduced the new Leon compact car range, which currently includes three- and five-door hatchbacks as well as a station wagon.
The Leon, Toledo compact and Mii minicar helped to boost Seat's sales by 10 percent to 242,487 in the first 10 months in EU and EFTA countries in a market that was down by 3 percent during the period, according to industry association ACEA.
According to media reports, a Seat SUV could incorporate styling elements seen in the Seat IBX concept that was unveiled at the 2011 Geneva auto show. If built, Seat's compact SUV would use VW Group’s MQB modular platform, which underpins models such as the Leon, Audi A3 and VW Golf.
Automotive News Europe contributed to this report