MARTORELL, Spain – Seat has plans to shed around 1,300 workers from its workforce at its Martorell plant near Barcelona in a bid to remain competitive. The move reflects a downturn in sales this year.
For the last few months the Volkswagen Group’s Spanish brand has been the subject of rumours about its future as it faced a decline in sales in both its home and export markets with speculation that it the Martorell plant might be closed if Seat did not meet sales and financial targets by mid-2006. There were even rumours that VW was prepared to sell its Spanish carmaker off although this was vigorously denied by the company.
According to seatcupra.net, Seat’s own website, the rumours started circulating in September following the report that VW’s net income had fallen 77 per cent in the last three years. Earlier that month ‘Der Spiegel' magazine claimed that Seat or its main plant at Martorell would be closed down in an effort to reduce VW losses. The Der Spiegel report failed to comment on how this would work considering how much design, engineering and production is shared between VW, Seat and other divisions, Skoda and Audi. The story was quickly denied by Seat. Der Spiegel said that Seat had been given a deadline of mid-2006 by VW to increase sales and earnings dramatically or money will not be available for future development. Failing this, the magazine suggested that Martorell could build other VAG brands (as it has done in the past) or in the worst case sold, potentially to one of many Chinese manufactures looking to invade Europe.
According to seatcupra.net, the basis of the story seemed to have come from recent comments from VW which recently painted a negative picture of car production in Europe due to rising costs and more competition from Japan , Korea and China.
This comes at a time of transition for Seat. In the last two years, the carmaker has launched a new identity and design language which has received mixed reviews. The Seat Altea, called a MSV, seems to be a hit in Europe , but for many families it did not add up to a small MPV such as a Vauxhall Zafria or Renault Scenic. The Seat Toledo was next debut and its controversial design drew much criticism on Seat’s own forums, often from current Toledo owners. Despite this, a Seat spokeswoman told Reuters that the Toledo was selling ‘in line with forecasts'.
At the same time, production of the slow selling Arosa ended while the market share of the soon to be phased out Alhambra has dropped. All of these accounted for a 9 per cent drop in production for the first half of 2005 following a smaller drop the previous year. According to news reports, production cuts at Martorell and a reduction in sales have resulted in excess workers which have led to Seat in talks about with employees regarding a reduction of hours or job cuts.
Meanwhile, the new Seat Leon is already proving to be a success, but the lack of sporting variants, which made up the majority of the model’s sales have not been helping the cashflow. Although the three new cars share many components, it will take a while to re-coup development costs. The launch of the Leon FR and Leon Cupra are critical to Seat as is the Ibiza facelift.
Seat intends to produce 429,000 cars in 2006, up from the 400,000 units planned for this year. In 2007, Martorell will make 448,665 cars and is likely maintain that production level until 2009.
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