Q&A: Schleef's aim is to boost Seat's profitability

Spanish carmaker's chairman aims to leave his successor a healthy company

Barcelona. The Spanish automaker Seat is carrying out a far-reaching transformation. Under the "Nueva SEAT" program, the model lineup is being rejuvenated. In an interview with Automobilwoche's Franz W. Rother, Chairman Andreas Schleef reports on future plans and the progress made so far.

Mr. Schleef, you have recently extended your contract at Seat to 2008.

To my 65th birthday in September 2008, to be exact.

How do you plan to put your remaining time at Seat to use?

In the past three years, we have already done a great deal -- today no portion of the company is still the way it was when I came here. Because of this, we are a healthy company today. But we have to continue to improve our customer and process orientation.

To boost earnings?

Our profitability has to be clearly better. Our owner (the Volkswagen group) has given us a clear target of a return on equity of between 9 and 11 percent.

Where are you now?

Appreciably below that. Whether we will be in the ballpark by September 2008, I don't know. I am not going to be making any promises here that will come back to hang me. But I will be leaving my successor a significantly more profitable company than the one I took over in 2002.

The workflow at the Martorell plant is not optimal. What can you do about that?

A great deal. Martorell is one of VW group's most recent factories in western Europe to be based on the principle of group work, but it hasn't been further developed along those lines. It is only now with our new wage agreement that we are coming back to the principle of group work. Plus: For reasons relating to maximizing plant capacity, there are three assembly lines in the plant. But there is only one paint shop. And that's with five models that we are now producing. That leads to a myriad of compromises. But we want to make a virtue of necessity. One line can run four days a week, another five or more days. The new contract lends it itself to that.

How much of the plant capacity is being utilized at this point?

Mathematically speaking, we can assemble about 2,100 cars per day, in three shifts. Currently, we are producing about 1,900.

Based on your goals, Martorell should become the best factory in VW's manufacturing group.

Not only that. We want to be the best in the world -- and without turning to additional investment to achieve that.

What auto companies are you measuring yourself against?

In Europe, against the French -- Renault more then Peugeot. And then naturally against Toyota. I find it fascinating that they have been working at the highest productivity levels for decades, and they don't have any dogmas.

Are there any new products to come after the recently launched Seat Leon?

To grow profitably, we absolutely need a fourth production series. We currently generate growth solely with the level of quality content, and higher-value equipment in engines and vehicles. That doesn't work for long. Our sales organization needs more fodder for the mid term.

New cars then?

Certainly. First it has to be clarified whether there will be a successor to the Alhambra. We depend on VW there. The Sharan understandably isn't the highest priority for (Wolfgang) Bernhard (head of the VW brand). But we absolutely need something in the segment - an MPV or a sporty variation on it.

And what might that fourth production series look like?

You could imagine a vehicle that heads in the direction of a station wagon, in a sporty way. With the A4 and the A6 Avant, Audi is a recognized trendsetter in station wagons. A nice derivative could come out of that for us.

Today Seat is strongly focused on Europe. Where do the markets of the future lie?

For us as a Spanish brand, the North American market is the next reasonable step. In the United States, there are now more Hispanic Americans than black people, and a growing consciousness that favors compact vehicles due to rising fuel costs. Toyota is demonstrating how you can reach a young clientele with its hip Scion. We have products similar to the Scion, even if none of our current products meets U.S. standards. So, that is a plausible perspective that I would gladly see, even if I will no longer be in the job to experience its realization.

What is VW group saying about these plans?

Nothing has been yet decided. The assumption is that we would be able to finance these plans under our own power. And, for entry into the U.S. market, Seat would need the support of other brands within the company.

Where would cars for North America be manufactured?

That would require some consideration. But VW group has considerable capacity in Brazil and Mexico that we would be able to use.

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