Why was my new SEAT Altea so much cheaper than the equivalent Volkswagen Golf?

I recently bought a SEAT Altea SE 1.6TDI DSG and I also looked at the equivalent Volkswagen Golf Plus. The SEAT worked out to be £4710 cheaper than the Golf. Taking into account the extras which are cheaper on the Altea and the fact that SEAT is giving me £450 more for my existing car than was offered by Volkswagen, the overall difference is £5160. I appreciate that the Volkswagen will be worth more in resale value but not anything near the difference in the new prices. It was no contest in my book.

Asked on 29 September 2012 by JB, via email

Answered by Honest John
The point is that VAG profits depend on perception and status which allows them to charge considerably more for Audis and Volkswagens than they do for Skodas and SEATs. It then mops up the sales it can't make to status seekers with SEATs and Skodas of very similar quality.

The cars then hold their values in line with customer perceptions, so those who pay more for Audis and Volkswagens don't lose much in the long run. That's why VAG is the most profitable car manufacturer in the world.
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