BARCELONA -- Seat CEO Luca De Meo used a clever pitch to persuade the Spanish brand's parent Volkswagen Group to approve a midsize SUV for the marque - he convinced VW Group chiefs that the new model would not only help Seat, but also boost capacity utilization at VW’s hometown plant in Wolfsburg, Germany. The Italian executive, who has also held key roles at Renault, Toyota, Fiat, VW and Audi before joining Seat in September 2015, explained how the plan became a reality in an interview with Automotive News Europe Associate Publisher and Editor Luca Ciferri.
Seat will launch a midsize SUV by the end of next year, a project that did not exist a year ago. What changed?
Seat was fighting to find a solution for a while. The idea for a midsize SUV had been discussed for a long time because such a vehicle would have had a significant impact on our profitability. When I got here in late 2014, we had the 20V20 concept [unveiled at the Geneva auto show in March 2015], but there was no business plan or production plan for the model. I was convinced that to move Seat to the next level a midsize SUV would be much more profitable than a midsize sedan.
So what did you do?
We made a pitch of our model proposal that was like something you would see from an ad agency. Our message was: 'You cannot prevent us from doing this because it is just too good.' The next step was to find a plant. We looked at Mexico, but VW told us it had capacity constraints there. That was the same problem at Skoda in the Czech Republic, where they were short of capacity for their Kodiaq and our Ateca SUVs. Then someone suggested that we build it in Wolfsburg. Making money building a Seat in Wolfsburg was not so obvious a choice. The design of the SUV also helped to get us approval. Now we are rushing to launch it within 18 to 20 months. We hope to have it on the market by late 2018.
Is this midsize SUV the first new Seat born during your tenure?
Yes, but architecture-wise my input was limited because to save on tooling costs and reduce time-to-market, we had to keep all the hard points of the VW Tiguan. I had more input on the next Leon [compact due in 2019]. That car will mark a strong change in our design language, being more emotional and sexy on the outside, but even more innovative inside. Our current interiors are very rational and logical. The new Leon interior will really make a leap forward, as well as introduce some innovations on architectures and body styles.
Which body styles?
As we did with the new Ibiza, we could consider ditching the three-door because volumes are fading for everyone. We will probably keep the five-door hatch and the wagon, but we will give them more dynamic and emotional body styles.
With the Ibiza, Seat was the first brand to use VW Group's new A0 architecture. The VW Polo will come second. Did Seat engineer the architecture?
No, the Polo was made by VW. But, with help from some people from Audi here in Martorell [Seat's headquarters in Spain where it has its main car factory] we are engineering the next Audi A1, which is based on the A0 and will be built here.
When you led Lancia during you time at Fiat, you derived the Musa from the existing Fiat Idea small minivan for a low 120-million-euro investment. Were you able to deliver something similar with the Arona small crossover that uses the MQB-AO platform?
We were very smart to obtain a new body style with a limited investment [to create the Arona] that was in the region of what you mentioned. Seat is extremely efficient with its r&d budget. Not only because we have never had so many new projects going on at once, but also because I continually get calls from other VW Group companies asking us to engineer vehicles for them. We are recognized for being quick and highly cost effective.
The initial production plan for your Ateca compact SUV called for 60,000 units this year. Is it true that won't be enough to meet current demand?
We could probably sell twice as many and, as soon as demand surpassed our expectations, we asked the factory to build more. But it is hard to cope when demand is double what was planned. This is not so uncommon when you enter a new segment because you lack an existing car parc. We faced the same problem at Audi with the Q3. When I was in Ingolstadt, we planned 70,000 units a year, but production last year reached 140,000, which by the way is great news for Seat, as we build the Q3 here in Martorell.
How high is the margin that Seat gets from Audi on the Q3?
It is a decent margin, but as a rule in the group, it is a fixed percentage of production cost. The policy is to keep a level playing field on the industrial side and leave the brands free to make as much money as they can on the commercial side.
What are your plans for the U.S. and China?
We have none at moment. Our focus is Europe, Latin America and North Africa, where we are leading VW Group's efforts in Algeria, starting with the new Ibiza in the second half of the year.
Why did Seat decide to develop electric vehicles after previously saying it wouldn't?
When I arrived, EVs were not considered to be relevant to Seat. Now adding them is a task the brand must tackle because of tougher forthcoming EU emissions rules and the declining sales of diesels. Selling EVs provides an immediate benefit toward reducing CO2 emissions from your new-car fleet. That benefit is more significant to the entire range than what you would get from launching partially electrified cars such as hybrids and plug-in hybrids.
When you debut Seat's first EV in 2019 which type of car will it be?
It will be based on a traditional platform, either the Mii minicar replacement or the next Leon compact. We will also use this first EV as test bench to understand how to sell and service an electric car. In addition, we are talking with VW Group about whether Seat could get a model from the group's MEB EV architecture. This car would come in the first half of the next decade. That being said, we must be extremely cautious. Affordability is must for our customers and an EV powertrain is still considerably more expensive than an internal combustion engine.