SUV drive helps SEAT as larger vehicles dominate market

02 May 2017

SUV drive helps SEAT as larger vehicles dominate market

02 May 2017 

With SEAT returning to profit in 2016, the Spanish manufacturer is now pinning its hopes on launching further SUV models to compliment the ones it believes helped its cash flow return to strength.

Two more models are expected to join the company’s line up of larger vehicles in the next two years to back up the company’s first-ever crossover, the Ateca, which accounted for around 25,000 of the manufacturer’s 410,000 total sales. This will be joined by the Arona subcompact SUV in 2017, with a midsize crossover, expected to be the company’s flagship, due in 2018.

SEAT CEO Luca de Meo believes that growing the range from zero to three SUVs will expand the company’s European market coverage from 53% to 72%, while hoping that sales of these vehicles will grow to 35% of the car company’s total units shipped.

He comments: ‘[When I joined SEAT] I was convinced that to move Seat to the next level a midsize SUV would be much more profitable than a midsize sedan. When we made our pitch to get the model our proposal was like something you would see from an ad agency. Our message was: 'You cannot prevent us from doing this because it is just too good'.'

Figures suggest that SUVs have a transaction price that is 15% higher than a similarly sized hatchback, which translates into higher profits for manufacturers. The SUV market is growing globally, thanks partially to low fuel prices and a number of new vehicles available for motorists. Recent financial figures have revealed a rise in SUV sales, with Ford showing an additional $428 million (€392 million) from sales of such models in North America and Europe during Q1 2017, with one in five cars sold in Europe being an SUV, a market the manufacturer highlighted was historically dominated by smaller vehicles and sedans.

Peugeot owner PSA, which has been on a product drive that includes the launch of several SUVs, reported an additional $325 million (€298 million) in revenues due to higher sales of the models, while fellow French carmaker Renault booked $57 million (€52 million).

SEAT’s turnaround comes at a crucial time for its parent, Volkswagen Auto Group (VAG), following the emissions scandal which has seen the automaker face a number of lawsuits and fines. While calls were made to close the Spanish brand and save costs, particularly with the brand having returned losses for 11 consecutive years, news of increased profits and re-aligning potential to take advantage of a growing market segment will bolster the company.

SEAT has already invested €900 million in R&D and other investments in the production line for its new Ateca alongside a new Seat Ibiza which will also be launched in 2017. The company has seen worldwide deliveries grow by 14.0% compared to Q1 2016.

Photograph courtesy of SEAT