Seat: New broom in the boardroom and back in the black

De Meo says the focus is on luring younger tech-savvy buyers to a range of cars that offer high levels of online connectivity

Luca De Meo, chief executive officer of Seat SA, says “we have one structural advantage which is we are part of the VW Group so in fact we can access state-of-the-art technology”. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

Luca De Meo, chief executive officer of Seat SA, says “we have one structural advantage which is we are part of the VW Group so in fact we can access state-of-the-art technology”. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

 

Seat is back in the black. The Spanish car firm, part of the VW Group empire, had been drowning in red ink for many years, raising existential questions about the brand. It has had more last stands than a cowboy in a spaghetti western.

Every few years there has been a new broom in the boardroom and with it promises of great transformations and a new dawn. Nothing changed.

This time, however, things just might be different. For a start the firm is making money.

And then there is that new broom in the boardroom. Luca de Meo, executive committee chairman, was the right-hand man for Fiat-Chrysler boss Sergio Marchionne, as he rescued the Fiat brand. De Meo was the driving force behind the 500 revival.

The 49-year-old Italian has worked at Toyota, then Fiat before being lured into the VW Group in 2010, where he has held senior positions in Volkswagen, then Audi. Seat is his first time he’s been given the keys to his own brand.

Yet it’s not all plain sailing. De Meo’s promotion came amid a major reshuffle of at the VW Group on the back of the dieselgate scandal. He departed a boardroom seat at Audi, a brand at the centre of the cheating scandal, in September 2015, days after the scandal broke.

The scandal over VW Group fitting cheat devices to deceive US emissions tests rumbles on and Seat has been caught up in it as much as the other Group brands. An affected Seat Leon is at the centre of a case before the Irish High Court later this month. It is regarded as a landmark case in Europe at the forefront of efforts by owners of affected cars seeking compensation from the car giant. US owners affected have been compensated but VW Group refuses to pay out to European owners.

One of the central elements in this court case is that the owner, Eithne Higgins from Co Roscommon, is seeking and Order of Discovery relating to the data that Seat – and VW – claims shows it has been able to remove the cheat devices from cars without impacting on a car’s CO2 emissions. So far VW Group has failed to release the information.

Surely it would save all the legal costs if the Group was to release the data? “I don’t know the details [of the case]. We follow all processes with authorities required. We have won majority of court cases [in Spain] for the time being and we will face them for months. The authorities gave pre-approval [for the removal of the devices] and more than that I can’t really say.”

Seat may have returned to profit, but on a turnover of €8.5 billion in 2016, the profit was €143 million, a margin of just 2 per cent. De Meo says its unrealistic to think Seat can deliver the margins of a premium brand, but it has the ability to tap into its popularity among younger buyers. This is where the focus is going to be, on luring younger tech-savvy buyers to a range of cars that offer high levels of online connectivity.

“One thing is important to understand is that compared to other similar companies in terms of size and position in the market, we have one structural advantage which is we are part of the VW Group so in fact we can access state-of-the-art technology.”

But don’t the German brands get first dibs on the latest technology? “It depends. When it was decided to put the Golf, Leon and Octavia on the new MQB platform, we actually found ourselves in the situation of having the latest technology base for our cars and the performance of the Leon in the market then proved that when we have the latest tech we can also deliver. And that’s what we have to keep in mind for the next generation: don’t do a compromise, but take the latest tech and package it properly. People want substance.”

So no more models like the Exeo, an ill-fated rebadging of an older generation Audi A4 that Seat tried to flog to customers as a new car several years ago? “Exactly. No more brutal badging of things. We will try to avoid as much as possible because it doesn’t make the whole story credible and it doesn’t work on the uniqueness of the brand or the authenticity.”

He sees the return to profitability as a massive opportunity for Seat to show its true worth. “I think we have been busy doing fire brigade work, solving all the cost issues and losses. Then also there was a feeling within the organisation – because they were in the red – that they had to prove they had the same competence and ability as their colleagues in Audi and Volkswagen. So they were in that kind of benchmarking world. Now when you look at an Ibiza or a Leon or Ateca, Seat has proved that it can stand next to any of them. “

De Meo describes himself and a product guy and marketer and his aversion to benchmarking also applies to suggestions that Seat should try to model itself on other car brands. “In branding benchmarking doesn’t work, because by definition you are not the original. If you say ‘I am the Spanish Alfa Romeo’ – and that has been a typical thing people say about Seat – well that just means there is an original one and there is a fake. And we don’t want to be a fake.”

De Meo reckons Seat has the ability to be a testbed within the VW Group. In return it can also assist other brands. It currently produces the Audi Q3 at Martorell and is doing other work for the premium brand. “We are very efficient in development. We are helping the guys at Audi to develop the A1, for example. We are not only working to build the car but to develop it here.”

Seat’s product offensive has already begun with the new Ateca crossover and now the Ibiza. Next up is the Atona, a smaller crossover. Back in Ireland its dealer network has been revamped to prepare for another roll of the dice. This time, however, they seem to have someone at the helm with a clear vision of what can be achieved. The ambitious Italian knows that if he wants his career trajectory to continue to soar, much will depend on making Seat a success.

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