Pulling the SEAT Out From Under Europe

As you can gather from the fact that I spelled "seat" entirely in capital letters, I'm not talking about Trump's plans for dealing with NATO allies.

Volkswagen AG, which has owned Spanish automaker SEAT since 1990, announced a few months ago that the SEAT brand is being retired once the life cycle of its current models ends.  The marque - one step up from the entry-level Škoda brand and one step below the Volkswagen brand itself in the Volkswagen Group's European-market hierarchy - was the nineteenth bestselling brand in Europe for the first half of 2023, selling 155,355 units in that six-month time frame - up 13 percent from the first half of 2022.  Pretty decent numbers, until you notice that the Cupra brand - a SEAT spinoff based on the SEAT León Cupra sport compact, sort of a Spanish equivalent to the Golf GTI - sold 111,829 units in the first half of 2023, up by 47 percent from the first half of 2022.  What's more, Cupra offers cars much more pricey than SEAT cars, thus offering bigger profit margins for Volkswagen AG, while SEAT had been losing money.  Also, SEAT's most recent all-new model is the Golf-based fourth-generation León, which debuted in January 2020.  "The success of the Cupra Formentor," automotive analyst Felipe Munoz reported, "was the key element to take this decision" to retire SEAT.

This is the Cupra Formentor.

Damn sport utility vehicles!

"It had been a debate to try and reinvigorate SEAT," Thomas Schafer, the CEO of Volkswagen Passenger Cars, told Autocar magazine, "but the brand had a history of making losses, and ultimately Cupra’s earning potential, cemented the decision."

I'm just glad that Carl Hahn, who died in January 2023, didn't live to see this.  Hahn, as Volkswagen AG chairman in the 1980s, had gone into a partnership with SEAT in 1986 when Spain was still endeavoring to make the transition from fascist state to constitutional monarchy  (and the experiment in Spanish democracy was almost stifled in 1981 when the Spanish army staged an unsuccessful coup d'etat by occupying the Parliament building in Madrid).  The deal allowed SEAT to make more Volkswagens for the European market to meet demand, and Hahn bought the company outright four years later, expanding Volkswagen's dominance in Europe while creating new economic opportunities in Spain.  Hahn had, by all accounts, saved a storied auto marque that is as beloved in Spain as Chevrolet is in the United States. And, as I noted in my obituary for Hahn, he took an orphaned state-owned industrial enterprise, as Volkswagen itself had once been, and turned it into a reputable, solid car make, combining a romantic vision with an opportunistically capitalist one.  The current VW leadership has no sense of romance or heritage, preferring to sacrifice a subsidiary company with a history going back seven decades for the almighty euro.  But then, maybe I'm getting too romantic.  This wouldn't be the first time a storied European brand has died what was likely an inevitable death, as fans of the old NSU brand from Germany would attest.

SEAT is likely to remain in business with its current and final crop of cars until 2030.  Cupra could come to North America, though that's probably more wishful thinking than anything else.   

Mr. Volkswagen

I just learned today by chance, on what would have been his birthday, that former Volkswagen CEO Carl Hahn died back in January of this year (2023) at the age of 96.  Note to American television news: You suck!  Though to be fair, he died just a couple of days after Elvis Presley's daughter, so his obitaury was probably overshadowed considerably.

That out of the way, I am sad to hear this news.  Carl Hahn was hardly just another Volkswagen executive.  Apart from Heinz Nordhoff,  who got the fledgling company up and running after the Second World War, Hahn is the most important figure in VW's postwar history.  He is the only man to serve as both president of Volkswagen of America and as CEO of Volkswagen AG.  He started the Beetle on its upward sales trajectory in the U.S. and he later built Volkswagen into a global powerhouse.

When Hahn first arrived in the United States in 1959, the Beetle was selling in respectable but miniscule quantities.  Most advertising for the Beetle was local, varying from one metropolitan area to another, and Detroit dominated the U.S. automotive with its pushy, glitzy ad campaigns.  After deciding to hire an advertising agency to compete with the Big Three, whose own small cars were just beginning to come onto the market, Hahn soon found himself disgusted with the cookie-cutter advertising for the Volkswagen that each agency he went to offered.  Then he went to Doyle Dane Bernbach a small New York agency whose co-founder Bill Bernbach, a Jew, had numerous Jewish businesses such as Ohrbach's department store and Levy's rye bread as clients and was known for producing ads with subtle, cheeky Borscht Belt humor.  Doyle Dane Bernbach roved to be the right fit for Volkswagen, as its propose advertising, rather than try to hype the car with gimmickry and novelty value, would instead admit to its small size, its odd shape, and its noisy engine.  The plan was to turn these deficiencies into assets, explaining how the car was fuel-efficient, inexpensive to buy and maintain, and how its improvements were under the skin.  Volkswagen, Doyle Dane Bernbach planned to stress, would not focus on how the car was changed on the surface to look better but how it was changed underneath to last longer.  Yes, the car was small, underpowered and even ugly . . . but it got you where you wanted to go. 

Hahn found Doyle Dane Bernbach's approach refreshing and he found Bernbach and his partners to be men of integrity.  He went ahead and hired the agency, and it created the most memorable ad campaign in history. 

The ads  Doyle Dane Bernbach created would send Beetle sales skyrocketing in the U.S., and they became as much as part of the pop-culture landscape as the Beetle itself and the Microbus.  Doyle Dane Bernbach would get the ad account for Volkswagen globally, and it would ultimately do business for Volkswagen of America for 36 years.  It also diluted the stigma against Volkswagen; a Jewish ad agency, was selling Hitler's car.  The years that Hahn and his successor, Stuart Perkins, spent running Volkswagen of America were the most fruitful for the German automaker in the United States.  The house that Hahn built - the Volkswagen of America headquarters in Englewood Cliffs, New Jersey - became the preeminent import-car business in America.  His faith in the Beetle earned him the affectionate nickname "Mr. Volkswagen" from American VW enthusiasts.

After a stint as CEO of Continental Tire in the seventies, Hahn returned to Volkswagen to become chairman in 1982, and his eleven years at the helm of Volkswagen AG saw the greatest expansion in the firm's postwar history.  Having inherited the new line of water-cooled, front-engine automobiles such as the Mark 1 Golf / Rabbit and the Scirocco, Hahn sought more markets for Volkswagen.  He invested in a small manufacturing plant in China, setting the stage for VW's phenomenal growth there, and would also set up Volkswagen dealer networks in the newly liberated Eastern European countries and as well as former Soviet republics such as the Baltic States.  Hahn's takeover of other automakers at this time was fueled by a vision  that was as romantic as it was opportunistic; he acquired Spain's SEAT and Czechoslovakia's Škoda, two companies that had once been the wards of totalitarian governments as Volkswagen had been, and modernized their lineups, freeing them from their authoritarian past as Volkswagen had been.  He also assumed control of the assets of VEB Sachsenring, the East German automaker that made Trabants, and converted the Zwickau factory into a modern plant, which now makes the electric ID.3 hatchback.  Hahn himself, in fact, had been born and raised nearby in Chemnitz and escaped to West Germany with his father, an executive at Auto Union (the forerunner of the modern Audi brand), and his mother when Auto Union relocated to Ingolstadt as Chemnitz fell into the Soviet zone of the occupation of Germany after World War II. 

One accomplishment Hahn failed to achieve as Volkswagen CEO, ironically, was the resuscitation of Volkswagen's U.S. division after it had languished in the face of stiff competition from the Japanese and Detroit.  After an making initial effort at improving sales in the United States and introducing the GTI to the country, Hahn more or less left Volkswagen of America to its own devices and concentrated on growing the business elsewhere.  By the time he retired in 1993, Volkswagen sales in the U.S. had sunk so low that it almost left the U.S. entirely.  Hahn, who had established Volkswagen in America, came extremely close to being remembered as the man who let the brand die in the U.S. market.  Only the strong actions by his successor as Volkswagen chairman, Ferdinand Piëch, prevented such an outcome.

Hahn's record is still admirable.  Under his time as Volkswagen AG chairman, the company not only expanded globally but produced exciting products such as the the Rallye Golf, the third-generation Passat, the third-generation Golf and Jetta, and the awesome Corrado sports coupe.  The incredible 16V engine and the G supercharger were also created in that time.  The cars became more advanced, more stylish, and increasingly fun to drive.  Hahn understood the meaning of Volkswagen - solid transportation at an affordable price with driving pleasure.  It showed in the way Americans embraced the Beetle in the sixties and American VW enthusiasts revered such cars as the Golf GTI and the Jetta GLI as well as the base Jetta in the eighties.  It's too bad that today's managers of Volkswagen of America - who would rather sell American-style SUVs than live up to VW's German heritage - don't get that.  RIP, Carl Hahn. 😢 

From Small Quantities to Thinking Small

This past January marked the seventieth anniversary of the first time Volkswagens were offered for sale in the United States, thanks to an enterprising Dutch car importer named Ben Pon (left, below).

Pon failed to interest any dealers stateside to take a Volkswagen franchise despite having been successful at selling Beetles in the Netherlands, the first country outside Germany where VWs were available.  In 1949, Volkswagen sold two Beetles in the United States.

In 1950, Volkswagen sold even more of them in the U.S. :-D

By 1959, Volkswagen had set up an official network of dealers, with its U.S. headquarters working out of a building in Englewood Cliffs, New Jersey, just across the river from Manhattan.  VW sales were respectable, with minimal advertising and word of mouth moving the metal, but Volkswagen of America's recently installed president, Carl Hahn, wanted to sell more cars, and so he decided to hire an advertising agency to launch a coordinated campaign.

And so it was sixty years ago that the most memorable car ad campaign in history was launched. :-)

While other car ads of the late 1950s presented incredibly glamorous illustrations and superlative copy to promote the product from Detroit's Big Three and the smaller domestic automakers still around then, Doyle Dane Bernbach, the small New York ad agency that Hahn employed, opted for a quieter, more subtle approach to selling cars.  Knowing that the Volkswagen Beetle was not glamorous, was not flashy, and - to most people - was not even pretty, the ad campaign it created preferred to be honest about the car.  It wasn't big or glamorous.  It was small and slow without many amenities.  But Doyle Dane Bernbach capitalized on the Beetle's strengths, particularly how its four-cylinder engine and its size made it economical to run and maintain.  Its beetle shape was streamlined and simple.  It was a car that made small a virtue in a country then (as now) obsessed with bigness.

The Doyle Bane Bernbach ads even acknowledged that the Volkswagen wasn't a perfect car, ironically underscoring Volkswagen's commitment to quality and reliability.  The "Lemon" ad reminded buyers that the factory in Wolfsburg was prone to making a defective car but that none of these lemons would ever make it to a VW showroom.  And the ads turned the VW's unchanging appearance - at a time when visible model-year changes from Detroit were commonplace - into a plus, saying that the changes VW made annually were under the skin and designed to make a VW run better and last longer, not look better or even look different.

Sure, GM or Ford might give their long, low-slung coupes a two-tone paint job.  But unless a Beetle owner was willing to do it himself on his car, you'd never see a two-tone Beetle anywhere.

Volkswagen made fun of itself in these ads for daring to offer such an ugly car.  But heck, VW was proud not to be what Ray Davies would call a "dedicated follower of fashion."  When it did make a beautiful car, as it did with the Type 3 Fastback, VW ads expressed mock concern about the car ruining the brand's image.

And yes, a Volkswagen was slow.  VW had no problem admitting that.

Because a slow car that gets you where you want to go is better than a fast car that breaks down a lot.

Volkswagen's ads were honest, simple and direct, communicating to the prospective car buyer of its features and how it provided reliable, economical transportation in a quiet, conversational manner.  The font, Franklin Gothic, was as low-key and as subtle as the copy, which was written with intelligence and wit by Doyle Dane Bernbach copywriters Julian Koenig and George Lois, who were always mindful to tell people what a Volkswagen was and show awareness of what it wasn't.

Volkswagen ads explained how the engine was cooled by air, highlighted the available traction from the rear-engine/rear-rive configuration, and explained the various improvements under the skin.  You knew what you were getting when you bought a Volkswagen.

Volkswagen mostly eschewed gimmicks like celebrity endorsements, though one memorable ad featuring basketball star Wilt Chamberlain showed him trying - and failing - to get inside a Beetle, the message being that while the Beetle was too small for Chamberlain, it was still big enough for most people. 

(Aside: Doyle Dane Bernbach retained a touch of that wit even in the watercooled age, when Volkswagen began to lose its way in the United States, when it brought back Chamberlain to show how he could fit in a Volkswagen Rabbit.)

Carl Hahn was pleased with his choice of Doyle Dane Bernbach for the Volkswagen campaign.  He found the ad men, including agency boss Bill Bernbach, to be people of integrity.  The Volkswagen Beetle ad campaign remains the gold standard for automobile advertising, both for the sales they generated and for their own refreshing honesty.  To show here even all of the best ads from the campaign would take too much bandwidth.

Today, Volkswagen doesn't want us to think small.  It's encouraging us to "drive bigger" - not drive a bigger car, like its SUVs, but a bigger idea . . . electric cars that return Volkswagen to the honesty and economy that the Beetle once offered, with a commitment to reducing greenhouse gas emissions, and admission of VW's guilt for the TDI scandal and a sincere desire to move on and redeem itself.  It's all very noble.  But, as vehicles get bigger and become more pretentious and less about getting from one place to another, I look at the old Doyle Dane Bernbach ads for Volkswagen and realize how thinking small was and could still be a big idea.