Awareness and credibility: two words that encapsulate Seat’s strategy for success.
They punctuate every other sentence uttered by head of fleet Peter McDonald as he describes the company’s aspirations for growth within the corporate market. They also suggest Seat has a better self-appreciation of its brand position after it initially struggled to establish itself under the ownership of the Volkswagen Group.
Just over a decade ago, VW Group announced distinct categories for its four brands in an attempt to create differentiation and mask the fact that each shared platforms, components and engines. Audi was premium, Volkswagen mass market and Škoda value.
And Seat? It was to be the sporty, emotional brand – auto emocion, as the advertising line went.
However, the policy was flawed: with neither a sporty heritage nor the right models, Seat struggled to live up to expectations. That slogan was subsequently killed off in 2011 and replaced with Enjoyneering, which bosses felt more accurately reflected Seat’s place in the market – combining the enjoyment of driving with the engineering and reliability that came from its German parent.
Since then, buoyed by some strong model launches, Seat has increased its UK sales. Retail took off first, but fleet is starting to catch up thanks in no small part to the Fleet News Award-winning Leon.
Fleet News: Fleet registrations have been much stronger this year. What do you put this down to?
Peter McDonald: There has been a transformation of our performance – we have grown our sales of Leon and some of that is down to the increased awareness and credibility given to us by the award. Most of our growth has been from end-user and corporate sales. We have doubled our order take and we are up 11% in fleet year-to-date. The performance of Leon is the real gem, in both hatch and estate models, which is where the true fleet business really starts. We have overtaken all the French, Japanese and Korean manufacturers in our performance in this segment.
FN: Are you confident you have sufficient products to appeal to fleets that are looking for sole or dual supply partnerships?
PM: Leon has helped our profile and credibility and we have won a number of accounts. But we also have a reasonable footprint of cars across segments, from city cars with the Mii to Ibiza to the Alhambra . Leon allows us to speak to the right people and we are still launching derivatives, such as the Leon X-Perience in December. That’s an important car for us because it’s four-wheel drive in a big estate with CO2 emissions below 130g/km – it’s a genuine user-chooser opportunity. It’s also an important car as a segue to a full SUV in 2016 – it builds our credibility. We also have a new Ibiza next year, so our portfolio is growing.
FN: Your rental sales are up this year by 147% (from 623 to 1,538). What are the benefits of rental to Seat?
PM: A lot of that growth is seasonality – it happened earlier in the year. is around 10% of our volume and we want to take our share but we don’t want it to be more than that. It is not a growth channel. It’s important for ‘bums on seats’ – our awareness is lower than we want it to be. On big user-chooser lists, where there are many brands, we don’t win as many as sales we wish and that’s down to a lack of awareness. But when people test one of our cars, our conversion goes up massively, so rental is doing that job for us.
FN: What changes have you made to your fleet team to better target corporate business?
PM: We had a massive increase in the fleet team as part of a Volkswagen restructure three years ago. We grew our account management team and increased our resource with contract hire and leasing partners. It has helped us to increase awareness and win more accounts. It has also helped to increase residual values and reduce SMR costs and cost of ownership which is down to the market awareness of our products.
FN: Where are the opportunities for growth – which type of fleets are you targeting?
PM: We are growing our share of business, but with so much choice some customers are sticking with the brand that they know – it’s an easy decision – rather than going for a challenger brand. We have opportunities with the Crown Commercial Service framework and National Police Improvement Agency on small cars and Leon-size cars. Beyond that, most of our growth is with the private industry with organisations that want best technology, best design, wholelife costs and who also want value. That’s where our brand is perfectly placed to win business. We want to double our results this year to the end-user and corporate market. We have good reliability and loyalty, but we are not always perceived that way, so we have to increase test drives of our cars and make people aware of our product quality.
FN: What role does your dealer network play in identifying business, fulfilling sales and serving the needs of fleets?
PM: Next year we are investing in our dealer fleets and our small fleet opportunities. We have 20 dealers with dedicated local business managers and we’d like to add another five. We provide coaching support and prospective resource, and have our captive finance house offering. We also have our agency dealers for our corporate customers. They operate to our agency standards with a scorecard to measure performance. They deliver a great service.
FN: Do you anticipate any challenges over the coming 12 months?
PM: Not challenges, but we want to grow. We realise this means winning new business. For most of the business we are winning, it’s the first Seat those customers have ever taken, so it’s about awareness. We have evolved the same technology as the rest of the Volkswagen Group – it’s not hand-me-down technology, it’s the same MQB platform and the same engines.