The Chinese market relaunch of Volkswagen Group's Seat brand, where it planned to develop a small electric vehicle, has been postponed because of changing business conditions and a revision in VW Group's strategy.
Interim Seat CEO Carsten Isensee announced the change in plans on March 25 at the company’s annual press conference. The brand, which pulled out of the market in 2015 after a brief run using European imports, has not indicated when it now plans to relaunch China sales.
A Seat spokesman told Automotive News Europe that the Chinese EV market had become much more competitive, pushing prices down and threatening profitability.
After growing quickly for several years, EV sales slowed in 2019 as the Chinese government cut back incentives, although their share of the overall market increased slightly to 4.9 percent from 4.7 percent in 2018.
Seat’s China launch was closely linked to the VW Group’s joint venture with Anhui Jianghuai Automobile Co., founded in 2017, which planned to invest 5.06 billion yuan ($750.8 million) in a new EV factory.
Former Seat CEO Luca de Meo and current VW Group CEO Herbert Diess signed an agreement with JAC in May 2019 “that enables further progress in the introduction of SEAT in China in two or three years.”
But that plan has been postponed.
Seat said in a March 25 news release that “within the framework of the revision of the strategy of the brands, markets and production systems of the Volkswagen Group,” it was postponing its entry into China and would not be part of the shareholding structure of the JAC Volkswagen joint venture, although it would continue to collaborate on design and R&D.
Diess, speaking on March 17 at the VW Group annual press conference, said that it was "safe to say that Seat took the very fortunate decision not to enter (the Chinese) market in 2019-20."
"China is a very big market so you have to put in a lot of effort and resources to enter that market," Diess said. "Probably for an entry into the volume segment of production it’s too late."