AY:

Volkswagen AG has stood by Spanish carmaker Seat through years of losses. Now the spreading emissions scandal tests Chief Executive Officer Matthias Mueller’s resolve to make unpopular cuts.

Long one of the weakest links among Volkswagen’s dozen brands, Seat fell back to a 40 million-euro ($42.9 million) deficit in the third quarter after a profitable first half. In seven straight years of negative results, it racked up a deficit of 1.39 billion euros. Several of its models are near-duplicates of cars sold by other Volkswagen marques. 

As the group halts non-essential projects to deal with more than 8.7 billion euros in fines and repair costs, the Spanish unit may be a more politically expedient place to cut than in Germany, where powerful labor unions sit on the Volkswagen board.