SEAT: Boosting economies with its global expansion strategy
Head of Regional Development at the Spanish auto company SEAT, Erdem Kizildere, reveals to Business Chief how its success in Europe has led to its global expansion.
When SEAT was founded in 1950 it had the sole goal of mobilising Spain. Now that it has achieved its mission, the company has set new targets much further afield. “During the 1980s SEAT was purchased by the Volkswagen Group (VW Group), which was the turning point in order to launch a much larger scale of business. The role of SEAT within VW Group is an entry gate for its multi-brand, multi-cultural, multi-continental operations,” reveals Erdem Kizildere, Head of Regional Development at SEAT. “Our brand is continuously growing across Europe. We have achieved what we initially sought in our domestic nation of Spain, and over the past five years have grown in other important markets on the continent, such as Germany – which is now our number one market – the UK and France. The scale of our growth has led to the company’s more recent ambition to internationalise its operations outside of Europe. So that task has been handed to me – to globalise our sales.”
The company has three core regions it’s targeting for growth: North Africa, Latin America, and China. “We have a very strong geographical position – we are basically one hour away from all North African countries,” Kizildere notes. “Then we have Latin America as a key region, where we have prominent operations in Mexico. I believe we are selling over 25,000 cars per year over there. Our new ambition is to extend this operation to other parts of South America: Chile, Colombia and the west tip of the continent. The third, and probably the most important, is China. This is because it is the single biggest market and the changes within the industry are happening there the fastest. In the future, in order to capture trends and be relevant, the Chinese market is a key, global focus for us.” In regards to different markets, Kizildere reveals that western Europe is more predictive, and the firm is dealing with a healthy, sustainable order bank. However, when dealing with nations that have fragile economies, “you always try to get the maximum growth and buckle up when there is a recession.”
In Algeria, SEAT has seen its business reach 18,500 vehicles over the past few years. The success in the nation since its launch in 2017 forms the motivation to further grow in the region, with the company anticipating huge potential. “North Africa, apart from being so geographically close, is the perfect match for our brand because the young population is dominant,” Kizildere notes. The company has one of the youngest customer bases in the automotive industry in Europe. The average age of SEAT’s clients is mid-40s – 10 years younger than other competitors in the market. “Young people have a direct impact on the decision-making process. In Algeria, they may not have the financial resources to purchase high-end European cars, but they still influence their parents who have access to certain budgets and will able to afford our cars. Appealing to this audience from the beginning with a very emotional touch has paid off really well. As the formula is working, and those markets have the horizon of growth in the upcoming years, we think we have potential for further growth.”
The business is currently leading VW Group’s production project in Algeria, which dates back to the nation’s shift in economic reliance. Having traditionally depended heavily on oil and gas exports, the government had to find an alternative when prices fell. Algeria invested in its motor industry, establishing a small series of assembly lines and quotas set for local production. VW Group decided to enter the market with a local partner, placing SEAT at the forefront of its project. “Algeria is a big country, and the local automotive has always been strong. When the market reached a certain point – almost 400,000 passenger cars and light commercial vehicles – we knew its potential. So, when the legislation changed, we selected the nation as our first location to assemble cars outside of Europe,” says Kizildere.
The head of department reveals how vehicle assembly is contributing to Algeria’s economy: “From a development perspective, I think we are playing an instrumental role. We have created over 800 positions of direct employment, as well as indirect roles in logistics and supply chain operations. We have contributed significantly to the development of skills within the Algerian labour force. Moving forward, we have targets and plans towards the industrialiation of the country.” SEAT has also established itself as one of the biggest promoters of compressed natural gas (CNG). With Alegria currently developing its infrastructure to supply more CNG, the President of SEAT met with the nation’s government officials to work together towards this goal.
The company is bracing itself for change within the industry – with trends such as electric vehicles, connectivity. autonomous driving and car sharing redefining the market. “At the moment, so much of the industry is going through a transformation and upcoming years are going to be really interactive for manufacturers,” claims Kizildere. “At SEAT, we are embracing these changes to get the most out of them.”
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