A little more than two years since the local introduction of Seat, Volkswagen SA has announced that it will cease sales of its Spanish subsidiary's products by the end of 2008.

By CARtoday.com editor Mike Fourie

"Current and expected circumstances make the ongoing importation of a niche brand in the SA market non-viable," Mike Glendinning, VWSA director of sales and marketing, said in a statement on Friday afternoon in September, bringing an sudden end to the Spanish marque's short presence on the local market.

When VWSA, the owners of the Seat franchise in South Africa, first launched the Ibiza light car, Leon compact hatch and Altea MPV models in June 2006, the vehicles offered an edgy, individualistic image combined with proven VW underpinnings.

However, in contrast with European markets, where Seat products are offered at lower prices than their direct VW counterparts, the opposite was true for the local market, where the pricing of the Spanish manufacturer's products was perceived as under pressure due to import duties and currency fluctuation. Furthermore, the slowdown in the South Africa's new vehicle sales, which began last year, has hit Seat particularly hard.

Although Seat reduced the prices of its models slightly in October 2006, and even went so far as to reimburse the difference to motorists who'd bought its products since the launch date, and we quote "customers who have already invested in the Seat brand prior to the price decrease will be contacted and offered the difference in the form of a cheque or transfer into their bank account", a total of only 2 600 Seats have been sold.

VWSA announced that it would contact individual Seat owners to assure them of "continued comprehensive after-sales support… by dealerships that currently service Seat vehicles. All warranties, service plans and roadside assistance relevant to the Seat brand in South Africa will be honoured".

Furthermore, Glendinning said that Volkswagen dealerships would offer all existing Seat owners "a preferential deal on the purchase of a new VW model".

Although it is commendable that VW promises a "preferential deal" to Seat owners (VW did not elaborate on the nature of the offer and subsequent resources suggest it may not necessarily be a four per cent disount on a new product), it seems clear to CARtoday.com that those who do not wish, or cannot, replace their Seats at this time - or aren't interested in purchasing a VW product - face rapid depreciation in the values of their vehicles.

Poor resale values affect brands across the board in the current economic climate, but the negative connotation of the Spanish marque's pullout from South Africa will likely cause Seat owners to suffer more than most. What's more, resale values of Seat vehicles are expecting to plummet if the market gets flooded by a rapid offloading of Spanish vehilces, especially almost-new ones.

And more worryingly, if a major automotive manufacturer and importer of vehicles in South Africa feels compelled to cease sales activities of its youngest brand, let alone a model range or two, one might predict that other struggling marques may not be around in the over-traded South African market for very much longer, either.