Wednesday, December 13, 2006

Please give up your Seat...

To somebody who needs it more than you do!

If Reuters is to be believed, the industry is a-buzz with the rumour that one of the first actions of the new regime at VW will be to put Seat up for sale.

I haven't yet trawled the speculation on possible buyers, but surely SAIC and First Auto Works must be front-runners - they're already making many of the parts and must have their eyes out for a bridgehead into Europe. If Seat is Shanghai-bound, the synergies with Roewe/Rover look attractive - the product ranges don't overlap, and Seat would presumably be sold with their European dealer network.

Could a Seat / Roewe / Ssangyong showroom could be a feature of your local motor park some time soon?

It's a possibility, but we need to consider what VW want out of reversing away from Seat.

Seat's greatest strength is that it is a live namplate, with a with a relatively fresh product range and an independent dealer network.

Its weakness is lack of clear identity and historical resonance.

Until the 1984 Ibiza was launched, the company mainly produced Spanish-market variations of Fiat products. Licensing arrangements ensured that they could not be sold in the rest of Europe and were only exported to markets like Malaysia and Egypt. The brand was largely unknown outside Spain as their cars were externally identical to the equivalent Fiats.*

Move on to the Volkswagen era, and the parent company tried to re-invent Seat as an Iberian Alfa Romeo. Even poaching Walter da Silva didn't carry that one off, so they moved swiftly on to producing some of the strangest-looking people-carriers on the planet.

If VW intend to dispose of the brand it doesn't look good for those on the ground in Martorell. Were a Chinese company to buy Seat, the attractions would be the intellectual property, use (even on a temporary or licensed basis) of VW technology, the European dealer network and the badge, in that order. If the buyer was one of the existing VW partners, components from China could easily supplant the VW group shared parts from European factories, reducing costs. Do VW want to sell the company only to create a competitor for Skoda and their own cheaper cars?

It's not improbable that VW's hidden agenda involves putting the Seat name 'beyond use' while limiting the liabilities associated with closure. They could offer Seat with such restrictive covenants on design rights and use of the name that it would be unsaleable. With no buyer the name would soon disappear and downsizing or closure of the production facilities would follow.

Then again, they could encourage a management buy-out, offload the liabilities for a nominal sum to some local entrepreneurs with venture capital backing, who could then go in search of a new partner in the hope of achieving a sustainable future for the business.

Does any of this sound familiar to anybody out there?

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