Analysis-Volkswagen's Seat on the brink as Chinese rivals gain ground
Analysis-Volkswagen's Seat on the brink as Chinese rivals gain ground
FILE PHOTO: Finished cars are stored at the SEAT factory in Martorell, near Barcelona, Spain March 24, 2017. REUTERS/ Albert Gea/ File Photo
By Joan Faus, Christina Amann and Nick Carey
Thu, September 17, 2026 at 8:06 AM GMT+3 4 min read
By Joan Faus, Christina Amann and Nick Carey
BARCELONA/BERLIN/LONDON, Sept 17 (Reuters) - Volkswagen's historic revamp looks set to spell the end of its struggling Spanish marque Seat, potentially making it the first major auto-brand casualty of the rise of Chinese carmakers as experts predict sweeping industry consolidation.
Seat would be the first longstanding auto brand to disappear since the early 2010s, when Ford axed Mercury, General Motors dropped Saturn and Pontiac, and Saab went bankrupt. Such closures are rare in an industry where famous marques can survive for decades.
The prospect underlines CEO Oliver Blume's willingness to streamline the sprawling German carmaker by focusing investment on its strongest brands.
Volkswagen's overhaul, which includes sweeping job cuts, follows a plunge in the group's China sales as domestic manufacturers gained ground, adding to pressure from the industry's costly transition to electric vehicles.
As part of the revamp announced earlier this month, Europe's largest automaker said Seat's future "beyond the current product cycle is still being evaluated", adding that "various scenarios remain possible beyond 2030".
A person involved in the discussions said Seat's fast-growing sister brand Cupra, which is going electric, will get all future products as Seat's combustion-engine models are phased out.
"We do not want to maintain two brand names," said the source, speaking on condition of anonymity because the talks are confidential.
Founded in 1950 as a state company during Spain's dictatorship, Seat was bought by Volkswagen in 1986 as a low-cost brand for its growing automotive empire.
But Seat has not launched a new model since 2020, a long absence in an industry where fresh products are critical to survival. The Barcelona-based brand accounted for less than 3% of Volkswagen's global deliveries in 2025.
Meanwhile, sister sports brand Cupra, launched in 2018, overtook Seat in annual sales for the first time last year.
Cupra offers three fully electric models, including the new Raval, which Seat-Cupra CEO Markus Haupt described in May as a "game changer". Seat, by contrast, has no fully electric models and none are planned.
Executives have repeatedly said the brand cannot justify the investment required for an EV programme because it is not profitable.
Seat union leader Matias Carnero fears the consequences for jobs. "If the brand disappears because it isn't going electric ... we have a serious problem," he said.
"The warning signs have been there," independent auto analyst Matthias Schmidt said. "It's been obvious Volkswagen is not prepared to continue with Seat."
Analysts say Volkswagen's dilemma is increasingly being repeated across the industry.
NATURAL SELECTION
While growing automakers can invest in new products, technologies and brands, companies with shrinking sales are often forced to make difficult choices.
Data from Felipe Munoz of Car Industry Analysis shows cumulative annual sales by European, U.S., Japanese and South Korean automakers fell by 12.6 million vehicles, or 17%, between 2019 and 2025.
European manufacturers accounted for almost half of that decline, with Chinese rivals capturing much of the lost market share.
Analysts say Chinese manufacturers are not the sole reason weaker brands have come under pressure since the pandemic. European new-car sales totalled 13.3 million vehicles in 2025, still about 2 million below 2019 levels.
But by intensifying price competition and eroding the dominance of established brands, Chinese carmakers such as BYD, SAIC Motor and Geely are accelerating difficult choices for legacy automakers already grappling with weak demand, huge EV investments and global trade tensions.
Volkswagen is not alone in taking action.
Stellantis is focusing investment on four of its 14 brands — Jeep, Ram, Peugeot and Fiat — with analysts predicting the world's No. 4 automaker could eventually ditch weaker performers.
"It's going to be survival of the fittest," Schmidt said.
NEW ORDER
The auto industry has undergone waves of consolidation before. Many early carmakers disappeared as larger rivals achieved the scale needed to cut costs and fund new products.
Analysts say Chinese manufacturers are emerging as the industry's next disruptive force.
Yet consolidation is unlikely to be limited to legacy players. China's car market itself remains crowded after a prolonged boom that has stalled, at least for now.
Consultancy AlixPartners predicts only 15 of the 129 EV brands currently operating in China will be financially viable by 2030.
The impact of the industry's upheaval is already being felt. Nissan is restructuring, cutting capacity and reducing future model plans, while Jaguar Land Rover is cutting jobs.
"This is all part of a global reordering," said Sam Fiorani, vice president at AutoForecast Solutions.
"There will be fewer legacy players and fewer Chinese players in the long run."
(Additional reporting by Andreas Rinke. Writing by Nick Carey. Editing by Christoph Steitz and Mark Potter)
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