Rising Asian competitors are challenging Spanish automaker Seat's efforts to position itself as Volkswagen group's sporty, dynamic brand.
"The Koreans are aggressively targeting our Ibiza," said Seat President Andreas Schleef.
"We cannot compete against Asian automakers on cost. Our strategy is to compete on design, sportiness and be the premium brand in our segments."
The Ibiza, Seat's best-selling car, competes in the small-car segment against Hyundai's Getz and Daewoo's Kalos.
Schleef believes Seat has a bright future following the successful launch of its Altea medium minivan in April and the completion of a new five-year labor agreement with unions at its factory in Martorell, Spain.
Labor unrest at Martorell led VW to transfer 20,000 units (approximately 10 percent) of Ibiza production to its plant in Bratislava, Slovakia, in 2002.
Seat's management and unions have signed a new pact, which means that, theoretically, Martorell's production line could run around the clock, six days a week.
"We have made a quantum leap [in labor relations] in the past two years," Schleef said.
"We are now more flexible and more productive than German car plants and, because we have a five-year contract with unions, I can plan ahead with no disturbances."
Schleef said Seat is on target to sell 30,000 Alteas this year despite a slow start.
The Altea is the first of its new models to have the brand's sporty design created by Walter de' Silva, its design director. The annual sales target for the Altea starting next year is 60,000 units.
"Altea was one of the best launches in the history of the [VW] group," Schleef said. Up to 40 percent of potential Altea buyers are driving other brands, said Schleef, "and there is also a much higher then expected percentage who choose high-performance versions, and higher trim levels."