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.