#tomorrowtoday: Sven Schuwirth, Vorstand für Vertrieb und Marketing SEAT S.A.

And then the decision was made to create a new brand within the Volkswagen Group for the new generation, those who have a longing for something new, who stand for emotions—honest emotions. That is our positioning: Tomorrow Today.

Me too, hello Johannes.

You've packed many questions into one. Yes, I'm an industrial engineer—it's a bit like what the professor said: they can't really swim nor really dive, it's a bit of everything. But that's good because it keeps you curious, and that's what probably brought me here. I started at Audi, which was a great time, and then through contact with Wayne Griffiths, my current boss who was my colleague back then, I've known him since '99—that's already a quarter of a century. He called me about three or four years ago and asked if I'd be interested in an exciting project called Cupra. And because I always have curiosity to try something new—that was always there—it's something where you think, in the middle of your career or after two-thirds, why not? And exactly do what you might have always wanted to do, but for certain reasons—because of legacy, history, certain concerns in every larger successful system—it's a chance to do something differently or build something new. That, I believe, is a motivation. I would also call myself a European in a positive sense, believing in the European idea, that it's an opportunity for Europe. We are always very envious of what happens in Asia, China, or the USA, but we can also do it, and maybe much better. At least so far, the market has proven that it is possible.

Cupra was founded before my time, but I witnessed it from my old position. The fundamental question was: do we even need new brands? That was the time when people asked, don't we have enough brands? But we also observed in the market an increasingly strong tendency among customers who say, 'I want something new, something different, not what my friends, parents, or grandparents drove.' The longing for a new brand is what many new players are targeting, but we didn't have that within the Volkswagen Group or among European manufacturers at the time. Then maybe the bold decision was made—I would say courageous, but also a dream was born—to create a new brand in the Volkswagen Group, and to position it not as a classic volume brand, not as mainstream, not as luxury or premium, but deliberately as a brand for what we call the new generation, for those who have a longing and desire for something new, who stand for emotions—honest emotions. Not just marketing fluff, but something authentic that may not appeal to everyone but is truly loved by some. That is our positioning somewhere between premium, luxury, and mainstream, but with a very clear target group based on a very simple recipe: emotions through design, but not just in the car. Performance—the joy of driving. We are not a brand that develops cars for people who want to be driven; we address those who, simply put, are passionate about driving. In Western Europe, that's the left front seat—the driver's seat—in the UK it's the right front. For them, and for those who want to make a statement through very expressive design that polarizes a bit—that's intentional. But it goes far beyond the car; it's more than a car brand, it's a second skin for customers, part of their lifestyle, without wanting to misuse that term. It's also in the way we act in marketing and the dealer network, always with the point that we want to create an experience for the customer, clearly oriented around emotion. Plus, we are challenging and visionary. Since we have no history or legacy that prevents us from doing something because 'we've always done it that way,' we try to do things differently and question conventions. It could be the same topic, but the approach is different, or we open up new topics. For example, sponsoring padel tennis: a few years ago nobody knew it, now it's the fastest-growing sport. Everyone laughed at us—'what is padel?'—and look at its success. Or our involvement with FC Barcelona—many have done that, but the way we activate it is different. Everyone has showrooms, yes, but how we design our showrooms—the Cupra garages, both regular dealer locations and inner-city formats like Cupra City Garages—is quite different from what a classic car dealership looked like until now. And not only physical, but also in the process, which we call Cupra Mass. These are just a few examples of many. We always try to question the existing and do things differently, not for the sake of being different, but always with added value, hopefully giving a personal, authentic experience. You definitely feel the passion and spirit.

First, we have two brands that, as far as I know, are unique in this form—they are positioned completely differently and are managed differently here in the house. SEAT is the entry-level brand in the Group, with a relatively young target group. It's more the first car when you get your license or want mobility—still fresh design based on good technology. SEAT is the entry brand; you could almost say it's the vacuum cleaner function of the Volkswagen Group, positioned at the bottom, but not negatively—it's accessible mobility for everyone out there. Cupra, as said, is positioned above the other volume brands of the VW Group, but on a horizontal axis from very conventional, classic mindset to a very modern one, positioned more to the right and above. So the two brands have very little to do with each other in positioning. What connects them is the name Cupra—Cupra comes from 'Cup Racing'—and back then SEAT had sporty variants, like other brands have S, RS, etc. Those were the Cupra models. To not start with zero awareness or make something inauthentic, they decided to take the name Cupra, detach it from SEAT, and form a new brand around that name. SEAT's sportier models are now called FR (Formula Racing), so it's completely separated. Of course, the VW Group shares certain technologies and modules across all brands for synergy, like any group does, but otherwise the brands have nothing to do with each other.

There was no book back then that wrote the story, even if many within the Group sometimes demanded a concrete, beautiful German plan. There were certain milestones or phases. We are currently in the second phase, where we are significantly expanding our portfolio this year, and there will be further phases towards globalization. Was that a detailed plan? No. It came about through a different recipe: a few believers, as we call them, inside the company, in a very tight circle outside the normal committee landscapes and processes—I would say almost daily communication or meetings to discuss the next steps. That, I believe, is one of the success recipes of Cupra: the people behind it, all sharing the same passion or idea. And it's not hundreds; at the core, it's five to six people who constantly come together and discuss the future, then go into the normal decision-making bodies. That was the plan. But there was always the wish or dream that the future of SEAT S.A.—which is the company under which the commercial brand SEAT and Cupra sit—that the financial robustness of the company would strongly depend on Cupra's success, through the price premium we can command and that is accepted. That gives us higher margins to put the company on a financially more sustainable footing, which we achieved four years ago with a financial turnaround. If you look at the last 30 years of SEAT S.A., the company always operated around breakeven, sometimes a little loss, sometimes a little profit, but never really significant. Last year we made a clear leap with over 600 million euros in profit. That's a strong result, and it's massively based on Cupra's success. This year we are taking the next step, and so on. We have the idea of where we want to go in terms of sales: in the medium term, we want to sell half a million vehicles. You might ask why half a million, not 400,000 or 600,000. That's about 3% market share in Europe. 3% gives you a certain relevance. Do we want 6-7%? No, because then we would become mainstream, and we need to keep that sharp line. A Cupra should remain a desirable product, not a car everyone drives—then we would be doing something wrong. We consciously want to set ourselves apart.

Regarding the crises: I believe this is the new normal, and we are convinced that without these crises, Cupra would not be where it is. They have made us stronger, always forcing us to be flexible and fast—agile, in modern terms—which has worked well so far. Another thing is that this tight-knit circle has grown very close and made the impossible possible. It's a bit like when you think back to school and played 'pisspot' in sports—when you were on the weaker team and through fighting spirit or team spirit you beat the stronger ones. That's the mindset here in the company: we can do it, we are much smaller than everyone else, but we are incredibly fast and direct without big processes for decisions. What I want to do differently than my predecessors? Well, the nature of the thing—the last two to three years besides the crises, there was the semiconductor shortage. We were essentially in a pull market—more customers knocking on the window saying 'give me a car, please.' Now that that's thankfully over, we are back in a push market, so we all have to focus again on selling and moving closer to the customer, learning together and pushing forward. Looking at the numbers, that seems to be going well, at least in the first four months, and we don't plan to slow down. That's certainly a difference from previous years. Secondly, in the past years, Cupra's success was primarily based on the Formentor model. We had the Born, but it was launched exactly during the semiconductor shortage. We also had the Ateca and the Leon, which design-wise were very close to the SEAT Leon—all from the past. This year we launched a Cupra Leon—just two to three weeks ago—for the first time a standalone Cupra for the Leon. We have the Tavascan, which we are just presenting to the press and will hit the market at the end of the year. We have a new Formentor, and we will get another baby, the Terramar. So we are going from a one-and-a-half-product company to a portfolio that has tripled or quadrupled by the end of the year. That creates complexity, challenges, but also many opportunities for us. That's the next change: we need to fine-tune our marketing, go bigger into training, diversify more. That always brings challenges, but we face them positively. So there are many things that have changed. What we must maintain is growth. We need to continue growing. We need success—not everyone believed in it; there were doom-and-gloom voices saying it's a one-day fly. We are thankfully past that; we have now sold well over 600,000 vehicles to date, and this year we aim for another sales record, and next year even more. So we definitely want to maintain that, but not units for the sake of units—it must be profitable and continue building the brand. Those are priorities.

We have no fear of the competition. I think we should not fall into that sometimes typical German mindset of 'oh God, it's all over.' I don't think so. We can learn some things from them—speed. We can become even faster, and we need to become faster. We can learn about costs, even if we operate with unequal means, especially in Central Europe. Here in Spain we have a clear advantage with our factory costs, which are significantly lower. We can also learn technology from them. Just as they have learned from us for decades, it's now time to learn from the competition. That's normal. We welcome competition. Why am I not afraid? I don't want to sound arrogant, but I think we have two or three assets that are not so easy to copy. One is design. You might say more Chinese competitors are hiring European designers, that's true. Nevertheless, I believe design comes from culture, and Europe has a very strong asset there—not only in automotive but in many other industries like fashion, music. We know that will come, but I think it will remain a strength. We need to maintain that strength, which is why we go very strongly into design and want to expand it further with the Cupra Design House, applying design not only to the car but also outside. That's one. Second is the management of a brand. I believe that is also an asset that European luxury brands have demonstrated par excellence for decades and centuries—that will bring us something. Third, we are Europeans, and in our case, Barcelona is a world brand in itself—it's Spain but more than just Spain. Fourth and last competitive advantage is our dealer network. We should not underestimate that. Many new competitors have shown that they might have great products and great communication, but at a crucial asset they have faced challenges. Selling a car is one thing, but a car needs to be 'operated'—the customer leases it for three years or buys it and expects service. This service backbone that we have, and we have a huge one in the Volkswagen Group with the largest capillarity in Europe, is an asset we can build on. That's something we cherish and protect. Which means Cupra's success would not be where it is without the dealers. That's a key point sometimes forgotten, but definitely not by us. We even involved some dealers actively in Cupra's development a few years ago and maintain a very open dialogue in small groups to discuss direction together.

Europe is the backbone, that's phases one and two. We first need to have Europe stable towards 3% market share. Nonetheless, we are already active outside Europe geographically. The UK is Europe, politically maybe not so much anymore. We have Turkey, we are very strong in Mexico—definitely not Europe—Israel also very strong, though with other sad challenges. We launched the brand in Australia a year and a half ago, deliberately to show that this brand has the potential with a new distribution system—we entered as a full agency from the start, basically greenfield, with success. And we have set ourselves the goal to make the next big step towards North America by the end of the decade. We also have a goal: to become one of the top 100 most valuable brands according to Interbrand—there are other rankings too. For that, we need a global footprint. And when you look at customer structures—we discussed and researched this for a long time—these target customers also exist in the US and Canada, with a longing similar to Europeans for something new. Not everywhere in America, but at least on the coasts: Sun Belt, East and West Coast, and maybe one or two larger metros. We will focus on that. That is our intention, and I believe it's a huge story for the brand and the whole company to consistently take the next step. So that's it from my perspective.

I am convinced Europe has a future—maybe we need to adjust in some areas. But for us as part of the Volkswagen Group, the time is over when every brand only produced in its own factories. We all operate on platforms, like every other group. Behind that platform, larger investments are needed to get a factory ready, plus building up all suppliers. So production is allocated more by platform to factories. That's why we, as we do here in Martorell, produce not only SEAT and Cupra models but also Audi. The Born comes from Zwickau, Germany; the Ateca from the Czech Republic. That's becoming common in the automotive industry. There was a deliberate decision to bring the Tavascan to China—the project decision was made a few years ago. Because there, with the cooperation of the VW Group, we have one of the most modern factories and can certainly benefit from the knowledge there and later transfer it back to Europe. But that's just like many other goods—like what we carry in our pocket—some say 'design for me,' we say 'designed in Barcelona.' Understood.

SEAT as a company is the same as Volkswagen for Germany—here in Spain. It has more or less almost identical significance, which perhaps not everyone knows: Spain is the second largest automobile manufacturer in Europe, 8th in the world. At its time, SEAT said 70 years ago, 'We put Spain on wheels.' A few years ago we changed that: we want to put Spain on electric wheels. Behind that is an initiative called Future Fast Forward. It's not just us, it's also the Volkswagen Group—PowerCo, the battery component manufacturer—together with the Spanish government and dozens of small and medium enterprises that have set out to electrify the Iberian Peninsula. Behind it is the largest investment ever in the history of Spain, around 10 billion euros. The battery factory in Valencia, the transformation of the Martorell plant to produce the so-called small BEV family from next year—not only for us but also for other sister brands—the VW plant in Pamplona, a battery assembly plant here in the region. So a lot is happening. Those are the homework or our commitment to Spain, and I think also to the EU—there could have been other locations. But this is a clear commitment of the Group and this company to Spain to build up this topic. Taking the second part of the question regarding Cupra: where do we want to go? We know the challenges in some markets that BEV adoption is progressing a bit slower than we might have thought two or three years ago. But that's not the case across all of Europe. It depends on how governments design subsidies. Germany, I believe on December 18th last year, more or less overnight cut subsidies—that came as a surprise, not planned as such, and it challenges us. But that's just one topic. Another is the infrastructure. If you look at the infrastructure and correlate the number of charging points in a country with the BEV share, there's almost a one-to-one correlation. Scandinavia, the Netherlands are very far ahead in terms of charging infrastructure density. I think Germany is in the upper third but at the lower end of that third. Other countries here in Southern Europe lag significantly behind. That's certainly a topic that will occupy us all—the transformation won't happen overnight. It might be clear that some ambitious EU plans or government plans don't work because too many other crises have come in. But I believe there's no going back. We also need to learn to talk more positively about e-mobility, not always say 'why not,' but rather 'yes, we are doing it.' And then answer the question: we also shouldn't always be critical because simply winding down the entire automotive industry's investments is not an overnight thing. Developing a car takes four to five years with all investments; we're talking about 10-year plans. And now there's the 2035 target. I'm not a politician, I'm not in the EU—maybe that will change, maybe not. But currently, that is the dogma. We are committed. We at Cupra plan to be at around 80-90% BEV mix in 10 years—so 80-90% of our vehicles will be electrified. There will still be some ICE cars towards 2035 because cars will still be running out. That the vehicle fleet won't be fully replaced by then is clear to everyone. But it's only the beginning because we all have a responsibility for the future, and I believe Europe can do it. Going back to Cupra: we are a good example, also in Germany, because the Born is the second best-selling Cupra currently and is doing very well. It's important that we address customers correctly, that we have a good overall package, but it's equally important that other partners—infrastructure providers and governments—also do their homework. Only in this triad can it work. And the icing on the cake is the opinion makers, the public perception—the press, journalists, influencers—so that we get a more positive mindset on the topic.

If I think from the customer's perspective: in the past, there was a much higher proportion of cash buyers; they are disappearing, now only isolated cases. It's all moved towards leasing and financing models, which are much more diverse than a few years ago. There are many more offers: usufructuary leasing, long-term rentals, short-term rentals, subscription models. So from the customer's perspective, there is a much broader portfolio of how to access car ownership or usage. That's one thing. Second is certainly the distribution models. From the classic indirect sales model—OEM headquarters to importer to dealer to customer—worked very well for years. It still works, and I believe we still need the dealer in every sales model because we can't do that globally from here in Barcelona-Martorell. But I think the division of roles will change. The agency model is a challenge but also an opportunity for all of us if we design it correctly, and then the online channels—the information a customer gathers today—connect much more strongly with the physical experience that a retailer can't achieve alone, but also not the OEM alone. And I believe that's the topic where hopefully an economic optimum will emerge. That may be, but I think the core motivation should be that we serve the customer out there much better, more personally, with what they want. This is a long journey, not just a few PowerPoint slides. It's a transformation that will take more than 10 years, and we are in the middle of it. We started: the Born is in the agency model. The next vehicle will be the Tavascan, and we will connect every electric vehicle into the agency model, making a phased approach—fade in, fade out. That's our approach. Whether it's the best, others may judge, but currently we are relatively happy with it.

A trustworthy topic: customer proximity. If we manage that—not that we as OEM have it alone, but that we play it in the triangle of OEM, importer, dealer—so that information flows much better for the benefit of the business and especially the customer. Secondly, we reduce intra-brand competition, create better price transparency for the customer, and reduce the sometimes ruinous competition that is self-inflicted. Those are the core advantages. It may also be that distribution costs for all involved go down eventually—the topic of demo cars, inventory financing moves away from the dealer in the agency model; we take that over, which again allows us to do stock sharing—keeping cars in the background and bringing them to where they are actually demanded, rather than every dealer having their own stock, which, if too high, leads to quick discounts that might please the customer in the first moment but later harm residual values. So the advantages are there.

I have been with the company for three years now. If I am very honest, three to four years ago you could already feel a small friction in the company: Cupra is a small unit, and there's the rest. Meanwhile, I would say we are well past the tipping point—there are no longer two sides, maybe a few, but everyone is pulling in the same direction. That's nice. The size of the company helps—only 15,000 employees makes it certainly easier than in larger systems with six-digit numbers. But what you definitely need are a few hardcore believers in the right places who transmit this mindset. It goes a lot through communication, but not newsletters—personal communication, involvement, engagement, empowerment—words that might not be in the classic process structures of companies or corporations. But get people to participate, and especially select the right people when hiring. Mindset is almost more important than qualification: everything can be learned with the right mindset. That's right.

In 10 years? (laughs) No, with 60? No, joking aside. In 10 years, we will be one of the top 100 most successful brands in the world. That is our dream, for which we do everything. That would be something really cool—from Spain, from Barcelona, out of nothing, to establish a new brand that no one questions anymore, that everyone perceives, that's something very special. And from the customer's perspective: in a few words, you want to drive something cool, a sexy car that isn't boring—Cupra. If we have achieved that, and of course all with growth, financial stability, meeting our financial goals, and the dealers are still profitable or more profitable than today, then we can all dance on the table—together. For that we live, argue, and fight every single day.