Spanish firm will start sales in booming Chinese market in ealy 2012 to help prop-up falling sales

Seat, the problem child of the Volkswagen Group, is to set up shop in China. The Spanish marque will exhibit for the first time at next month’s Shanghai Motor Show and expects to be selling cars in China from early in 2012.

The announcement was made unwittingly in response to a question from the audience at the annual Volkswagen media and investor conference.

James Muir, the Welshman who took charge of Seat in 2009, told Autocar that the time is right to enter the burgeoning Chinese market. “We are appealing to a new generation of Chinese customers, young, design-orientated people buying the cars themselves [rather than with their parents’ support] who are looking for cars that express their personality.”

Seat will start in China with the high-specification Cupra performance versions of the Ibiza and Leon made in the factory at Martorell, near Barcelona. The majority of the two million Volkswagen Group cars sold in China are made there in joint ventures with Shanghai Automotive (SAIC) and First Auto Works (FAW) but Muir is confident “there is a continuing market in China for imported cars. Audi and other luxury brands have been very successful”.

In the longer term, Seats could also be made locally but this first move into Asia is part of a drive to increase production at Martorell, which operates well below its 500,000 capacity, and turn the company’s consistent losses (€311 million last year) into profit.

Muir had hoped to achieve the turn-round by increasing sales in Spain and other European markets. But last year, while Seat regained its position as market leader at home after 31 years, car sales there dropped by 40 per cent.

Seat can’t see a quick recovery in its core markets; hence, the need to expand beyond Europe. Currently, Seat ventures only to Spanish-speaking Mexico, where it has been relatively successful, first with the old-model Cordoba and more recently selling the Ibiza. Seat hopes to use Mexico as a launch pad for other markets in Central America.

Ray Hutton

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