Spanish carmaker Seat, part of the Volkswagen Group, could start building cars in Russia within the next three years but needs a strong spare parts logistics strategy to maintain sales growth, according to the head of the company’s Russian unit, Roman Kuzmin (pictured). He said that poor spare parts distribution had previously impeded the carmaker’s development in the country. By Vladislav Vorotnikov

Kuzmin predicted that Seat would be the next Volkswagen Group brand to localise assembly in Russia, following Volkswagen-brand and Skoda vehicles in Kaluga and at the Gaz plant in Nizhny Novgorod. Audi production is also scheduled to launch this month at Kaluga.

Seat’s sales in Russia are currently small, but the brand is in the midst of expanding its product offering and dealer network. Sales in 2012 were 2,500 units, a rise of 122%. During the first three months of the year sales rose 247% to 860 units, according to the Association of European Businesses. 

According to Kuzmin, this is Seat’s third attempt to gain a foothold in Russia. He said that the company’s analysis of past failures had suggested that it needed a better spare parts logistics and distribution strategy, as a short supply of spare parts turned out to be the company’s biggest problem.

“No wonder they say that the first car sells the dealer, while the second sells the service,” said Kuzmin. “When we first opened a new distributor, it immediately recorded a significant surge in sales. But then the level of sales came to naught for the one simple reason that the logistics for the supply of spare parts was very badly organised."

Kuzmin added that the company would not make the same mistake again, and that it is currently paying special attention to spare parts logistics. Partly for this reason, Seat re-entered the market as part of Volkswagen Group Rus in 2012, which gives the brand advantages in its ability to use Volkswagen’s existing logistics schemes.

"We are already fully integrated into the supply chain of both vehicles and parts, so the replication of the mistakes of past years is simply impossible,” said Kuzmin. “Currently we offer one of the best services in the territory of Russia."

The Volkswgaen Group sold nearly 316,000 vehicles in Russia last year, including VW cars, vans, Audi, Skoda and Seat. Sales in the first three months of this year were up 1% across the group, with Seat and Audi the only brands to register growth. 

Kuzmin said that Seat’s dealer network in Russia is expected to grow to 37 by the end of the year, up from 25 at the end of 2012 and just 10 in 2011. Amid such expansion, Kuzmin declared that Seat was ready to build cars in Russia, and that local assembly could take place within the next three years across the Volkswagen Group’s existing plants.  

"We already have a fairly wide [distribution] network capable of selling the cars and we have the necessary production capacities,” he said. “I'm talking about plants in Kaluga and Nizhny Novgorod. Such brands as Volkswagen and Skoda have been already localised. The localisation of Audi has been announced. We will be next.”

Kuzmin added that initial assembly could be for the Seat Toledo sedan, but he also said that in future Seat planned to bring a crossover to the Russian market that would also be assembled in the country.