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Volkswagen says Seat brand is on last chance to succeed

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Volkswagen says Seat brand is on last chance to succeed

05/14/2010, 2:12 PM BY MARK KLEIS

Volkswagen Auto Group currently finances the losing efforts of its Spanish Seat brand, but VW says that its current attempt to revive the brand will be the last. VW’s turnaround plan calls for fresh products over the course of five years to help Seat turn a profit, otherwise, they intend to shut the brand down.

Volkswagen AG has set a five-year timeline on its Seat brand to stop its financial losses and dwindling sales, or the parent auto group will be forced to wind the brand down, according to Bloomberg.

Seat, based in Spain, lost $138 million for VW in the first quarter for 2010, an amount that more than doubles the losses by Bentley and VW’s commercial vehicles, its only other two sources of losses. VW has set a timeline of five years for the brand to at least stop the losses, or it will be forced to stop the bleeding and terminate the brand.

“This is the last attempt for Seat as a brand, it would not be sensible to view things differently,” said Seat’s CEO, James Muir. “If one would want to get rid of Seat, one would have to give the other party money to take it.”

Muir was brought in to Seat last September following the ousting of the previous CEO, despite his three-year attempt to save the brand. Muir was previously in charge f Mazda Europe, making him a suitable candidate for the job. Muir’s plan to save Seat evolves around expanding the vehicle lineup for the brand, as well as attempting to grow the brand outside of its native Spanish market.

Marc- Rene Tonn, an analyst from M.M. Warburg in Hamburg, Germany, told Bloomberg that, “It will be difficult to turn Seat around. Most of their sales stem from southern Europe where the crisis has hit small-car makers particularly hard.”

Many analysts also fear that the current financial crisis hitting Greece may soon spill over into neighboring countries, potentially affecting the Spanish market for Seat.



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