just-auto.com editor's weekly highlights - Issue 295
Wednesday, November 9th, 2005
Europe rather than North America has been the focus of
cost cutting and restructuring this week. SEAT in Spain is
trying to cut its wage bill and the management has
sweetened the pill for the unions by announcing more
investment for Martorell. And it emerged at the end of
last week that Ford is planning sizeable job cuts at
Cologne.
Ford?s European restructuring has been going on for quite
a while, but SEAT ? along with other firms with big
manufacturing facilities in Spain ? suddenly finds itself
in new and uncomfortable territory as Spain loses its
low-cost sheen to the EU?s hungry new entrants in the
east.
The open sore of confrontational labour relations allied
to high costs at Martorell has been made worse for VW
Group by the lacklustre performance of SEAT models in the
marketplace. And that is in spite of a young looking model
range line-up. I am surprised that the Altea is not doing
better, but it looks like someone dropped the ball with
the Toledo?s styling (rear-end inspired by a trip to see
the hippos at the zoo perhaps).
With SEAT?s European car sales off 6.4% on last year?s
pace (by contrast VW, Skoda and Audi brand sales are all
up) in the first nine months, hopes for a sales upturn
look to rest heavily on the recently introduced Leon and
customer incentives on slow-moving models. Against that
background, cost cutting will inevitably assume a major
role in a SEAT profit recovery.
But the market itself is especially tough for SEAT at
this stage I think. The grand design to turn SEAT into an
exciting brand embodying sporty Latin flair (VW?s Alfa)
has some way to go and the company is therefore still
mixing it in the market with other ?value driven? brands.
And the competition in the value area is fierce right now
(resurgent Koreans, Skoda still ticking over nicely).
As Volkswagen in Germany has to, increasingly, swallow
some pretty distasteful medicine, it is hard to see how
Martorell can escape a big dollop of pain, even if it
comes with a very thin layer of sugar coating.
Dave Leggett
Managing Editor