Paul Barker grabs a cuppa and a chat with one of fleet’s most influential figures – Coffee with…Seat UK head of fleet and business sales, Peter McDonald
An influx of new SUV and crossover products over the past three years has driven Seat to new heights, hitting the top 10 of true fleet end user sales in 2018. Fleet boss Peter McDonald talks through the past successes and future plans.
QYou’ve had strong recent growth, helped by new models entering the popular SUV sectors. How did last year end up for you?
As a brand, last year was a good one for us – it was a record year in fact. We broke in to the top 10 for true fleet and got to around 19,000 sales in true fleet. So a really strong year for us. And within that year we had to manage through the introduction of WLTP, but the big change for us last year was EasyMove.
Seat is about to head into the world of electric vehicles for the first time, with an all-electric Mii coming before the end of the year, followed next summer by a plug-in hybrid Tarraco SUV and electric production version of the El-Born concept car (see Top Picks, right).
“It’s the most awesomely exciting thing we are going to be doing,” says McDonald. “The fact we as a business have got a clear strategy and approach, and desire to lead in that space is exciting,” he adds, pointing to BIK taxation and business’s environmental efforts as reasons for the company car sector to lead the move to electric power.
“We think the big opportunity with electric vehicles is within corporate end user and public sector space. We think they will be the early adopters in the market, and we believe every fleet should be in the process of considering whether electric cars are right for them and when they are right for them,” he continues.
“We know that there’s lots of desire to purchase electric vehicles from certain fleets, so we are working with customers right now to ensure we have the right supply coming into the UK market and that it’s fit for them.
“EVs will be on the agenda of every major decision-maker next year and the fact that we’ve got them coming is really exciting. The fact that we want to take leadership in that space is even more exciting.”
QEasyMove meant you almost eliminated options from the range and incorporated everything into the different trim levels. How has that worked in the marketplace?
That was obviously a very future- and customer-oriented programme. We simplified our specifications, took options out and put metallic paint into the price of the car, which made it very easy for customers to choose and buy.
The future thing is that it makes it much easier for the leasing company and company car drivers to understand the cost and CO2 implications – if you add options to a car, it changes the CO2, which changes the way it is quoted and the banding it might be in. We believe we future-proofed that.
QWhere has Seat seen the benefit of that change?
It’s helped us in a couple of ways. We think we are much simpler to choose, it’s much simpler to understand what specification you are getting and which Seat is right for you. And since we built those options into the base specification of the car, we think it’s helped optimise both the residual value and some elements of total cost of ownership. For instance, if you put parking sensors as standard on your vehicle, you get a residual value benefit for the sensors. You also get an insurance benefit, which isn’t recognised if you put them as an option.
And then things such as metallic paint were just right for the consumer; 90% of cars are ordered with metallic paint. Someone chooses the car they want and then says “I really want the blue one” and the blue one costs more. We wouldn’t want the customer to be in the position of choosing a different colour based on the cost of it. Those things helped enhance the residual value, enhance our position in market. It was complicated to go through but we’re through that now and seeing the positives of it. We are continuing to grow – we’re up on last year already. Where the market year to date on true fleet is down 4%, we’re up 1% and our order bank is about 2000 units higher than it was at the same time last year. We are very close to matching, in a sales and order bank position, last year’s sales already. This will be another growth year for us.
QThe new models have provided incremental growth in segments you weren’t previously present in. Is that what is behind the growth?
You’re right to comment that new models have certainly helped, and those models have been in the right segments, small SUV in particular. The segment that Arona falls into is up 45% year to date, the segment in mid-SUV, where we see Ateca, is in line and Leon segment is down. The new SUVs we have are certainly fitting into the right growth segments of the market.
But in terms of why we are optimistic about the future, it’s because a lot of that growth has been in Leon. Leon is now equivalent to third best in the [true fleet] segment; VW Golf and Mercedes A-Class lead the segment, we are third. We are on par with Ford Focus in terms of volume in true fleet. So growth has certainly been supported by the introduction of new cars in the right segments, and they have put more appeal to the brand as a whole.
In the past we only had a small representation in the market, now we can offer a whole portfolio of vehicles and that makes us a better partner of corporate fleets.
I guess the bit we’re still very optimistic about is that new models have helped, but they have helped us build our base so we have been selling more Leon – it’s still a great car.
QHave there been any drawbacks to the change to EasyMove, such as having to go for a higher spec if there’s a specific option you want, such as heated seats?
A little bit, yes, because some fleets request that level of optimisation and bespoking a specification. You can understand that a fleet may want a base-specification car but their drivers do high mileage, so they want adjustable lumbar support. And we need to walk them into a car that might be a trim higher to get that lumbar support. So there is a certain amount of challenge in that approach, but where we have benefited is that those cars now have higher residual values and are more appealing, and they’ve worked incredibly well in user-chooser space where people are making a decision in corporate fleet, or places such as public sector. If you are able to very clearly describe the vehicle and all the specification in it, and get the best residual and TCO you can, that’s a big win.
QAre you still running the four-day test drive, and how is that going?
We love the four-day test drive. We don’t believe it should be difficult to book a test drive if you’re a company car driver. We believe they have a real right and desire and need to qualify whether the product is right for them or not. Their vehicle is often used as a family car outside of work hours – it needs to do a work job from them but also needs to be fit for all sorts of other purposes. And these people pay company car tax on their vehicle so that’s why lots of organisations introduce a user-chooser policy where they can have a degree of choice.
We would love to support those company car drivers in evaluating our products; we want to be the easiest manufacturer for fleets to work with, and make that palpable and have real substance behind it. And the substance is that we have the easiest test drive booking process of any manufacturer, and it’s a very generous test drive. Not only is it easier, but we’ll give you a car for four days, drop it off and pick it up for you. It allows company car drivers to drive the car, do school pick-ups, go away for a weekend or do whatever they would do normally – they can put it through its paces.
We’re going to facilitate around 2500 four-day test drives. That’s what we’ve done in the last 12 months.
QHow has the new Tarraco seven-seat SUV been received by fleets?
Positively. It has really helped us from the point of view of a flagship vehicle. Our range used to top out at Ateca. We have Alhambra but in terms of core company car fleet we used to top out at Ateca.
It’s great that we have a large SUV and it’s great that it’s below 130g/km – that helps it to work on lots of company car policies; it’s an extension to our fleet that makes us an even better partner to work with. It’s a great vehicle that we’re really proud of that will make us a stronger manufacturer.
We are one of the top markets in the world for Cupra. Like lots of premium performance cars, Cupra works really well in the contract hire market, it has good residual values and is a desirable product for the contract hire and leasing market. We’re successful at selling Cupras in true fleet predominantly through contract hire.