Frankfurt - Volkswagen (VW), Europe’s largest car manufacturer, will add a compact sport utility vehicle (SUV) to the Seat division’s line-up in 2016 to win new customers and accelerate a turnaround at the German parent’s only unprofitable unit.
The new model marked Seat’s entry into a market segment that had increased by more than 40 percent over the past five years with almost 1 million vehicles sold annually in Europe, the division based in Spain said yesterday.
The SUV will be designed and engineered in Spain.
Expanding sales across Europe and abroad is vital to restore the brand’s earnings. Seat, which has not been profitable since 2007, narrowed its loss to e152 million (R2.2 billion) last year from e156m a year earlier, as deliveries rose 11 percent to 355 000 cars, driven by demand in Germany and the UK.
“It’s part of Volkswagen’s business model to make as many vehicles as possible on one platform,” NordLB analyst Frank Schwope said. “It seems natural that VW is adding a Seat model to give the brand the opportunity to sell more vehicles and to get profitable.”
VW stock rose as much as 2 percent in Frankfurt yesterday. It has gained 17 percent in the past 12 months, valuing the car maker at e83.9bn.
VW planned to build the SUV at a plant run by the company’s Skoda division in the Czech Republic, where labour costs were lower, a person familiar with the matter said. The most likely location was the factory where Skoda produced the Yeti SUV, said the person, adding that no final decision had been made.
Officials at VW declined to comment.
Seat said earlier this month that it was weighing options to begin producing cars in China.
“The SUV is an important pillar in the future corporate strategy,” Seat chief executive Juergen Stackmann said. – Bloomberg