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. Last Updated: 07/27/2016

Spain's SEAT Backs Out of Russian Auto Market

Spanish automaker SEAT has decided to stay out of Russia's booming car market and will not open a chain of dealerships here, parent company Volkswagen Group Rus said Tuesday.

SEAT has declined an offer from Volkswagen Group, which includes VW, Audi and Skoda, to open a network of dealerships, said Vera Logvinova, assistant to general director of Volkswagen Group Rus Ronny M?ller.

"We've been in the planning stage but then had to drop [the plans]," Logvinova said. SEAT determined that dealerships in Russia would be financially disadvantageous, she said.

The news comes as most foreign carmakers are seeing sales go through the roof. Russians bought 225,000 new foreign cars in the first half of this year, compared with 280,000 sold in all of 2004, according to PricewaterhouseCooper.

Volkswagen plans to increase sales by 52 percent this year to 11,500 vehicles, up from 7,588 in 2004, M?ller told Interfax last week.

SEAT, however, occupies a miniscule share of the market. SEAT sold 157 cars in 2003 and a mere 87 vehicles last year, according to Vremya Novostei newspaper.

SEAT models have been available through a limited number of showrooms.

"The price-to-quality ratio couldn't hold up to the competition," said Vladimir Pokrass, advertising manager of Avto-Prestus car dealership in Moscow.

Jean-Francois Tremblay, an automotive analyst at Ernst & Young, said it was not SEAT's quality but rather poor brand awareness that led to sluggish sales.

"I am a bit surprised that they are stepping out right now," Tremblay said.

"Russian customers are hooked on famous brands," he said, adding that less-known brands take a longer time and more money to promote.

A SEAT spokesman in Barcelona, Mario Guerreiro, said he could not immediately comment on the matter.