Volkswagen to phase out SEAT by 2029, handing control to CUPRA

Volkswagen phases out SEAT in favor of CUPRA: the end of a historic Spanish brand

While markets braced for austerity measures, Volkswagen shares surged 6% after approving 50,000 layoffs. But the move goes deeper: the SEAT brand will cease to exist before 2029, absorbed by CUPRA, which already boasts higher global sales and better margins. This decision, long in the making, has accelerated due to the electric vehicle crisis and intense Chinese competition.

The end of a brand: CUPRA inherits the legacy

SEAT’s disappearance is not a factory closure but a rebranding exercise. CUPRA, born as a sporty subsidiary, becomes the group’s sole representative in the entry-level segment. However, CUPRA vehicles are not budget options; prices range from €40,000 to €80,000. Meanwhile, SEAT models like the Ibiza or Arona will continue production, but under the CUPRA umbrella? No, the announcement clarifies that SEAT vanishes as a brand, with CUPRA taking the reins. Production at the Martorell plant remains, focusing on models like the CUPRA Formentor, Leon, and the upcoming Raval. Yet, not all CUPRAs are made in Spain: the Terramar comes from Hungary, the Born from Germany, and the Tavascan from China—a map reflecting the new global strategy.

Martorell and Navarra: next on the chopping block?

The announcement has reignited antiestéticars in Spanish plants. Some analysts suggest that if Volkswagen closes factories in Germany, it won’t be because Spain is cheaper; although wages are lower, labor taxes remain high. Additionally, Chinese competitors, with 20-25% engineer automation compared to Europe’s 7-10%, are driving productivity gaps. The shadow of the Vilvoorde plant in Belgium, closed by the group years ago, looms over Martorell and Navarra. Is it just a matter of time? Uncertainty is total.

China: the enemy that also buys

Meanwhile, China emerges as a potential destination for manufacturing. The documentary "American Factory" illustrates how a Chinese firm took over a General Motors plant, increasing automation and reducing jobs. In Spain, precedents exist: the revived Ebro brand isn’t Chinese-owned, but speculation suggests Chinese investments could reach former factories. If Volkswagen decides to sell or close, assets might end up in the hands of Chinese manufacturers, as seen in other industries. European dependence on the Asian giant grows, while environmental policies become the Trojan horse of deindustrialization.

The hidden truth behind Volkswagen’s profits

Volkswagen is not loss-making, yet shareholders demand dividend maintenance. The company has lost 30% of its global production, precisely in China, and compensates by cutting costs in Europe. The approved 50,000 layoffs are just the first step. The strategy is clear: reduce the model range and optimize factories, mirroring China’s approach where each model has two variants without extras. The result: an aging Europe without industry, dominated by Asian brands. The question is whether Spanish workers will be next on the list.

This is not an isolated decision. The European automotive sector faces a perfect storm: electric transition, Asian competition, and policies rewarding offshoring. SEAT’s disappearance is a symptom, not an exception. How many more brands will fall before the EU reacts? Only time will tell, but the trajectory is worrying.