Soon to clock up six months as head of SEAT, Jürgen Stackmann talks brand performance, plans for China and future products. Glenn Brooks reports.
j-a: Things seem to finally be improving for SEAT, particularly in a number of European markets such as the UK. How many cars will you sell across the globe in 2013?
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JS: I can’t say how many but I can say we will close the year growing. I’m confident we can continue the pace of growth but how much exactly this will be at year end remains to be seen. Making any predictions on the European market is these days very difficult.
j-a: SEAT must have be especially happy about having Audi Q3 production at Martorell to keep overall utilisation up. How many did you build last year?
JS: Around 100,000.
j-a: What is happening with China? You’re still a small brand there relying on imported models. Wasn’t the Leon due to be made at FAW Volkswagen’s new Foshan plant alongside the Golf and A3?
JS: The testing of the brand is still ongoing. We have eight active dealers and the initial outlook of how China would be has pretty much changed in the last two years. The initial idea was to start an import based business. That promise has not been fulfilled for two reasons. Import volume is going down for volume brands – people are moving into premium brand circles now. And, the price levels of imported cars have fallen dramatically. So we see a huge pressure on the pure import business.
The second question is do we have a solid business case as a new brand in the volume segment? This is still based on limousines (sedans) and we don’t have a limousine in China. I would say that this situation has not yet been closed in its analysis; we are still in a test phase, working with those eight dealer partners.
j-a: When will you make the decision about moving ahead in China (or not)?
JS: This will be in the next few months. I would say that the pre-conclusion is that it [staying in China as an import-only brand] doesn’t really make sense.
j-a: So that means no local launch for the rest of the world’s latest generation León to replace the old model which you still sell in China?
JS: We are working right now with three cars in China: the Ibiza, the outgoing León and the Alhambra. We are looking at what price levels would make sense for us, what new vehicles would make sense for us. The question we are asking is is there a space for a brand of our profile in the Chinese new vehicle market. If that makes sense, then maybe there could be some localisation with one of the Volkswagen Group’s joint ventures but we don’t know the answer to this right now.
j-a: You stopped building the Exeo before the (northern) summer. When will you cease building another old model, the Altea series?
JS: Yes, we no longer make the Exeo. The new León ST is the replacement for the Exeo ST (wagon). But the Altea we still make. It is one of the best examples of what my work here has so far consisted of. This is a great car, completely underestimated, and actually pretty much forgotten about also by ourselves.
In many markets, SEAT is linked to the Ibiza. It’s the Ibiza brand. But now the message we are sending out is to focus on the Ibiza, and also the León, and then go beyond that. Toledo is a small volume car in many countries. Altea XL is also vastly underestimated.
j-a: Even though the Altea, XL and Freetrack series is now nine years old, you believe it can be revived?
JS: It [Altea and its derivatives] has a much longer life than people have estimated.
j-a: What can you say about an SUV?
JS: My answer is complex. The focus today is to make use of the opportunities that we have. I am not fully convinced that the brand has taken all the opportunities to widen the sales footprint. León has been a huge investment and we have to make the most use of that investment. ST opens many doors in many, many markets. This also applies for other models, such as Altea, or Toledo and so on.
SUVs or crossovers are clearly a segment on the move. There is an intuition that SUVs will continue to grow because they offer a combination of functionality and emotion. It [an SUV] would be a great brand fit. But, I need to get convinced that this car makes future business sense and sustainability for the brand. Until I see that fully reached, I’m not going to press the green button for that car.
j-a: Do you see MPVs eventually being replaced by crossovers and SUVs in Europe?
JS: People love a high seating position, they love the functionality of MPVs but they don’t want to be seen ‘in a box’ so to speak. That’s where SUVs and crossovers make perfect sense. They offer a bit more, I would say ‘social status’ and individuality – they make you feel good. That’s why I believe that crossovers, not necessarily 4x4s by the way, are a great opportunity for the coming years.
I don’t see MPVs disappearing. Take Alhambra. Alhambra is a 20,000 unit vehicle for SEAT, every year. Yes, on a total perspective of segmentation, seven-seater big vans in Europe are only a fraction of the total industry. It’s 1.3% now and it’s going down, but the number of players in this segment is relatively small. Many people think big vans are only for families but you have a 50:50 split of private customer and fleet. So it’s a great business for us. And, Alhambra will not be replaced by an SUV. But I expect to see some of our competitors’ compact vans morphing into compact SUVs.
j-a: Why does the Volkswagen Group need SEAT?
JS: I think it is an important family member. It rounds off the family portfolio, particularly for the European region – our home turf. It offers the potential to offer a sportier, younger appeal as a mainstream brand. I don’t want to get into niche: we are a mainstream brand. Our customers are on average 10 years younger than Škoda customers, so you offer the door to a different type of customer. Not necessarily a different rational need but a different emotional need.
If you take Volkswagen as the centrepiece, basically Škoda would be the more, let’s see rational-functional piece, and SEAT would be the younger, fresher and more emotional piece but still linked to a mainstream portfolio. So that’s a good place for the brand for the future and can make sound business from that.
j-a: What happens if the new León isn’t as successful as you want it to be?
JS: Not being able to deliver sales success, that isn’t a real option. In many countries we are very small and therefore there is much to be gained, rather than to be lost. In many countries we are not relevant to most consumers – they think of us only for the Ibiza, or as too sporty, or only for their sons. The strategy is to have an equal volume for Ibiza and León. That way you will eventually have a better balance for your business.
j-a: How many Ibizas have you been selling?
JS: About 150,000-160,000, so that tells you what I am thinking for León.
j-a: SEAT was unlucky to have Spain as its main global market, a country that has lost about two thirds of its former annual vehicle sales in just a few years. Can you ever recover at home?
JS: We are looking at a 25 or 30 year low for the European market right now depending on which statistics you are looking at, so yes, obviously we have quite a challenge. But our position is to make sure that whenever the recovery happens, we are ready for it.
j-a: With the local market in such a slump, why wouldn’t you fill your Martorell plant with production of more vehicles for other Volkswagen Group brands?
JS: The outlook of SEAT cannot be to do this. We have to grow our brand to a level higher than where we are today. But that is not to say we will not produce more vehicles for other brands – you know we already build the Q3 for Audi and so we have the proof that we can do this, we can make the highest quality cars with the latest technologies. So we’re capable of basically doing any car in terms of quality and knowhow. Our drive as a management team is to fill the place with ourselves [SEAT vehicles].
j-a: When will we see these extra SEAT model or models?
JS: It’s the obvious question but the reality is we can’t predict when, the way Europe remains. I hope we are at the low, at least for the Spanish market, and now we see some strong signals that there is some optimism coming back.
j-a: Do you see the Spanish market returning to its former record levels?
JS: Probably, it is unlikely for it to go back to where it was, ever. But from 700,000 cars today to 900,000 – absolutely feasible.
j-a: Will you have the right product to exploit that recovery? Surely you need a Juke rival and a Qashqai rival to take full advantage. Which one will it be?
JS: The Nissan story is a good story. Basically Nissan dropped out of the mainstream and placed a huge bet, which worked, and lucky for them. If it hadn’t worked, we wouldn’t have had Nissan [Europe]. As for SEAT, I cannot tell you too much but I will say this: more than what our model will look like, or how it is designed, it needs to be a pillar of the brand to make strong business sense, and to drive sustainable profitability.
