Currently reading: Seat sales increase 10% but profitability takes hit

Seat and Cupra sold a combined 471,000 cars last year but suffered negative operating loss of €371 million

Seat increased sales by more than 10% in 2021, despite a year where the firm was heavily hit by the impacts of Covid, semiconductor shortages and increasing raw-material costs.

Of the 471,000 cars the Spanish company sold last year, 391,000 were from Seat, representing a slight drop of 2% compared to pre-pandemic 2020, while numbers were bolstered significantly by the success of performance brand Cupra, which tripled its sales to around 80,000. 

Turnover increased by 5.4% to €9.25 billion (£7.7bn), while the market share of both brands grew 3.6% in Europe. In terms of profit, however, the firm lost €256 million (£215m). 

Cupra accounted for 25% of the company’s overall turnover for the year.

Electrified models increased in demand, with sales rising from 15,000 to 61,000. 

However, Seat said “several trends” had hindered it from “achieving the recovery it had hoped for”. 

Production was heavily affected by the chip crisis. Seat manufactured 125,000 fewer vehicles - 25% below its initial expectations for the year. 

“In 2021, after learning to live with the negative effects of Covid, our plan to return to profitability was dramatically affected by another crisis: the shortage of semiconductors,” said Seat president Wayne Griffiths. 

“This led to a massive loss of production volume, a negative impact on sales and a negative operating result of -€371m.” 

As part of its Future: Fast Forward programme, Seat has announced a joint venture with the Volkswagen Group to invest more than €7bn (£5.89bn) to "electrify Spain" and develop EVs. 

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It said the spend will be the largest industrial investment in Spanish history and will include the construction of a battery cell factory in Sagunto, Valencia. 

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“This project is highly important for Volkswagen, for Spain and for the whole of Europe,” said Thomas Schmall, Volkswagen Group board member for technology and chairman of the Seat board of directors. 

“It’s our ambition to electrify Spain, and we're willing to invest more than €7bn together with external suppliers for the electrification of our Martorell and Pamplona plants and the localisation of the electric battery production value chain in Valencia.” 

Seat is also expecting further disruption caused by Russia’s invasion of Ukraine. The Cupra Born has already been hit by production interruptions at Volkswagen’s Zwickau plant, while production of the Seat Tarraco has been put on hold because of a lack of Ukrainian-made parts.

“The war is obviously affecting our business,” Griffiths said. “Currently the Martorell plant is operating but at a lower level, due to the lack of semiconductors, and will further be impacted by the lack of essential parts from Ukraine. 

“What worries me most is if the price and supply of energy is disrupted further, this could hit our production even harder than Covid or the semiconductor shortage.

"Despite all the unpredictability and crises, we know one thing for sure: the company can't continue to make losses.” 

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