NAME: Luca de Meo
TITLE: Seat President
AGE: 52
MAIN CHALLENGE: Remaining VW Group’s most affordable brand despite added costs because of the move toward electrification.
Seat is on track to set another vehicle sales record this year, but the Spanish brand is struggling to remain the most affordable brand within the Volkswagen Group because of the high cost of electrifying its lineup. Seat President Luca de Meo discussed this and more with Automotive News Europe Associate Publisher and Editor Luca Ciferri.
Will Seat top its sales record of 517,600 cars in 2019?
We have had double-digit growth this year [up 11.1 percent through October], and we expect to maintain this pace for the full year. The final quarter of 2018 was affected by the switch to the WLTP homologation rules. This year that won't be a factor.
Do you expect a registration peak in November-December as models that emit higher levels of CO2 are off loaded before the EU's stricter fleet emissions limit takes effect in January?
You won't see this at Seat because we won't to do it. I prefer to end the year at its natural cruising speed and have a good start in 2020.
Four years ago, you said that Seat's midterm target was to reach an operating margin of about 4.5 percent. Last year you also set a new record for revenue but despite doubling operating margin it stood at 2.2 percent. Why?
Like everyone in this industry, Seat is investing massively in electrification. That obviously dents short-term profitability. That being said, our contribution to the VW Group is more than what our operating margin shows because it also includes sharing platform costs, manufacturing investments and components purchasing.
Has adding the Ateca and Tarraco SUVs helped Seat to increase brand loyalty as much as you had hoped?
They have. We increased our loyalty rate by 12 points to 40 percent in Europe's five largest markets.
Seat has targeted annual sales of 40,000 Tarracos but through nine months you sold about 23,000. Why has it fallen short of the goal?
I am not totally happy with the sales results of the Tarraco. To address this we are fine-tuning its powertrain mix. This is happening because we have demand from the markets for front-wheel-drive versions with an automatic transmission, but we only had that transmission in pricier four-wheel-drive versions. Another factor for slow sales is that emissions levels are becoming an issue for midsize SUVs in markets such as France, the UK and the Netherlands. We will address this with a plug-in hybrid variant that arrives next year. Also, we have not yet launched the more expensive FR variant, which we expect could cover up to 30 percent of sales. Therefore, we have to be patient with the Tarraco.
Last year, VW Group gave Seat responsibility to develop a sub-MEB architecture for full-electric vehicles. Could you update us on the progress?
We are working on this at our technical center in Martorell (Spain) as well as in China with our joint-venture partner, Anhui Jianghuai Automobile Group (JAC). The current challenge is to see if -- and to what degree -- these two projects could converge. Right now, we are still at the technical-concept phase at both locations. We expect more clarity on how to proceed in about six months.
Will this sub-MEB platform be used for EVs that are at or below 4 meters?
That is the plan.
Your first EV will be a variant of the Mii minicar. What are your expectations?
Product wise, I have high expectations because for more than three years I have been driving an Mii modified by Seat to be full electric. It is the perfect car for urban mobility. Sales wise, it could account for between 5,000 and 10,000 units in 2020. The actual number that Seat will get will depend on production allocations decided by the group [the electric Mii will be produced alongside the VW e-up and Citigo EV].
Is the by-brand EV mix neutral at VW Group because emissions are pooled?
Correct. A volume of 5,000 to 10,000 EVs does not change a brand's average dramatically. This happens when you move from 10,000 to 70,000 EVs.
Your second EV will be the el-Born compact, which will share its underpinnings with the VW ID3. When will the el-Born go on sale?
The plan is to be on the market by late 2020 and everything is proceeding well.

What is the future for the Tavascan electric compact crossover concept unveiled by Cupra at this year's Frankfurt auto show?
It is more than a design exercise to show what Cupra could do using the underpinnings of the forthcoming VW ID4. We really want to build the Tavascan and to make the production vehicle as close to the concept as possible.
If the Tavascan gets approved, when could be on the market?
Late 2022 to early 2023.
PSA says that to be compliant with the EU's 2020-21 emissions targets it will need 7 percent of its overall sales to be either full-electric vehicles or plug-in hybrids. What is the percentage at Seat? Will this percentage rise as diesel sales decline?
A 7 percent penetration of electrified model sales also applies to Seat. Our diesel share is a bit below the market, at 25 percent so far this year, but compressed natural gas models account for about 4 percent of our sales. That helps to lower our CO2 average.
Cupra is growing with its Seat-derived portfolio. What is the future for the brand once it adds its first Cupra-specific model, the Formentor crossover?
With Cupra we started three years ago with 7,000 units. Last year we increased Cupra sales by 40 percent to 14,300 units -- mainly due to demand for Cupra versions of the Leon. We were up by 80 percent to 20,600 through October thanks to the addition of the Cupra version of the Ateca. The plan is to reach 25,000 units this year. We will launch the Formentor by the end of 2020. It will be the true test bench for the Cupra brand's potential.
What do you mean by test bench?
When we conceived the Formentor, the plan was to debut it as a Cupra and later add a cheaper Seat variant to reach the volume planned for the project. We have now decided to scrutinize the potential of the Formentor as a Cupra-only model to see what we can reach in terms of volumes and margins.
Do you expect the higher margins to offset the lower volume?
This is exactly what we want to determine. Cupra variants now sell for 10,000 to 15,000 euros more than their equivalent Seat models. This has a massive effect on our margins. I am not going to disclose how much that effect is, but it makes me really happy and shows the great potential Cupra has as a stand-alone brand.
If the Formentor succeeded how this might this affect the future of the Seat brand?
We have designed Cupra to exists as an extension of Seat. In the foreseeable future, we do not see that changing. Seat is the VW Group's entry brand in terms of age group while a Cupra buyer both more affluent and older than a typical Seat buyer. The most important thing is that the brands serve two completely different customers.
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