SEAT, Volkswagen‘s Spanish subsidiary, has been given five years to restructure or else VW will be forced to shut down or sell the ailing Spanish brand. While SEAT’s cars are known for offering excellent value with an emphasis on performance rather than luxury. But despite positive reviews from auto journalists, this hasn’t translated into sales for the brand, with sales falling 8.5 percent in 2009. SEAT’s Spanish factory is only working at 60 percent capacity, something VW considers unacceptable. The factory is capable of producing 500,000 cars a year and must be run at 80 percent capacity to turn a profit.
After losing $140 million year-to date, Volkswagen is at the end of its patience with the group, and SEAT head James Muir is aware, describing the last-ditch effort as “the last attempt for SEAT as a brand.”