25% of Seat combustion engine car production in Martorell is at risk

The impact of European tariffs on Cupra, which bears them by making its Tavascan electric SUV in China, could see up to 25% of vehicle production cut at Seat’s Martorell plant to comply with emissions rules. Brands CEO Wayne Griffiths warned this Thursday in a scathing open letter, criticizing the inaction and inefficiency of authorities that are jeopardizing the financial stability of the company and the sector as a whole. The works council calculates that the potential cuts would mean a “severe reduction in employment” and the loss of around 50,000 vehicles due to production at the Catalan plant.

“The auto industry is under threat. And Seat too,” Griffiths said, looking at the company’s accounts, with profits falling 17% in the year to September to 415 million despite higher sales. “This is just the first example of the risk we face.” The manager condemned the lack of government support for electric vehicles, from financial to manufacturing or charging networks, as well as poor decisions that hamper demand and threaten financial stability, production and employment.

A major underlying issue is the CO₂ reduction targets that will come into force in 2025. Brands will have to reduce emissions by offsetting the production of electric vehicles and cars with internal combustion engines as a great tool. Failure to comply with this requirement will result in a fine of several million dollars. In Seat’s case, tariffs will also put pressure on Tavascan. Griffiths speaks of “misunderstood protectionism”. A rate of 20.7% will reduce your profitability. Added to this is the slow growth in demand for electric vehicles, with customers “frustrated that electric mobility is part of the solution.” Griffiths noted that only 5% of cars sold are electric.

Meanwhile, the accounts don’t add up as Tavascan is one of the group’s biggest bets in electrical engineering. If you can’t sell them, you’ll have to offset the emissions of your other cars somehow. The solution could be to reduce the production of internal combustion engine cars. The weight of the tariffs “will jeopardize Seat’s ability to achieve its goals. This will mean that the planned production of internal combustion engine vehicles at Martorell will have to be reduced by a quarter,” explained the person in charge. The fewer Tavascan vehicles the group deploys, the more they will have to cut.

In 2023, 443,443 vehicles left Martorell. It is predicted that there will be more this year. The 25% reduction will affect models with an internal combustion engine, among which stand out those that only have this option, such as the Seat Ibiza, Arona or Audi A1. If Tawascans are not included in the numbers, that could mean a reduction of more than 50,000 units, says Matias Carnero, president of the works council. “The impact on employment will depend on the cars he can bring in, that’s the rule of three. In any case, this will entail a serious reduction,” he explains. Workers are waiting for the company to negotiate with the municipal authorities on a tariff reduction.

profit drop by 17%

Looking to the future, this idea is repeated. “The outlook for next year presents significant challenges,” Seat said. The company reported its results through September amid a “challenging global environment driven by an increasingly competitive environment and compounding effects” as well as increased investment in its product offensive. Operating profit is 415 million euros, down 17%, “mainly due to the difficult economic situation affecting the global automotive industry.” This follows a 3% decline in revenue to 10.5 billion, despite an increase in vehicle deliveries (422,100, +7.7%). This combination means that cheaper cars are sold.

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Eduardo Magallon