Spain is the world’s eighth largest producer of automobiles and its car market stands among the largest in Europe.[47][48] However, this has not always been the case; in the first half of the 20th century,

Spain’s economy was relatively underdeveloped compared to other western European countries and had a limited automobile market. In this period there was only limited car production and only a few low volume local manufacturers catering mainly to the luxury end of the market, of which Hispano-Suiza was the most successful. Spain’s limited market for mass-produced vehicles was taken over by foreign companies operating through subsidiaries that either imported cars or assembled cars from imported parts, depriving the country of the technological know-how and large investments needed for mass production. The situation greatly deteriorated with the Spanish Civil War of 1936 to 1939. Car demand collapsed, not only due to the greatly reduced purchasing power of Spaniards caused by war devastation but also because the multinational subsidiaries either ceased operations or were severely stricken by the war and its aftermath.[49]

SEAT’s first emblem.

The lack of interest shown by the foreign firms in the weakened post civil war Spanish market opened an opportunity for local interests.[50]SEAT dates its origins back to June 22, 1940 when the Spanish bank ‘Banco Urquijo‘, with the support of a group of industrial companies, (Hispano-Suiza, Basconia, Duro-Felguera, S.E. de Construcción Naval, Euskalduna, S.E. de Construcciones Metálicas, Fundiciones Bolueta, Echevarría etc.) founded the ‘Sociedad Ibérica de Automóviles de Turismo’ (S.I.A.T.) with the goal of establishing Spain’s own mass production car maker. The initial Banco Urquijo’s project aimed at running the S.I.A.T. motor company as a fully private enterprise but soon after 1941 the interventionist state holding company Instituto Nacional de Industria (INI) following a decision taken by the Franco government on January 3, 1942.[51] The goal for the new national car brand was not to be only another licensee car maker assembling foreign designs and parts in Spain, but of developing the whole manufacturing process from design to assembly within Spain. Because of the country’s lack of expertise in automotive mass-production development, it was decided to find a foreign partner who would contribute technically and with its own models in the early years in exchange for cash, shares, bonds and royalties. With the rest of Europe having entered World War II, and Spain itself in ruins from its civil war, the project was delayed but not abandoned due to its strategic importance.

José Ortiz-Echagüe Puertas, SEAT’s first ever president, was in 1976 made honorary president for life.

SEAT under its current name was founded on May 9, 1950 under the denomination ‘Sociedad Española de Automóviles de Turismo, S.A.’ (S.E.A.T.) by the Instituto Nacional de Industria (INI) with a starting capital of 600 million pesetas — equivalent today of almost 3.6 million Euros — in the form of 600 thousand shares of one thousand Pesetas each, and in a time when the country was in need of remodelling the fundamental structures in its national economy, just after the end of World War II. The birth of SEAT came almost a year and a half after the Spanish government and six Spanish banks (‘Banco Urquijo’, ‘Banco Español de Crédito (Banesto)‘, ‘Banco de Bilbao‘, ‘Banco de Vizcaya‘, ‘Banco Hispano-Americano’ and ‘Banco Central’) had signed on October 26, 1948 an alliance contract with the Italian car manufacturer Fiatso as to form a partnership with a foreign ally in order to bring to life Spain’s major car manufacturer.[52] The favoured bidders were Germany’s Volkswagen and Italy’s Fiat. Fiat’s bid won for several reasons including Fiat’s prominence in Spain and the fact that the company established the short-lived ‘Fiat Hispania’ plant in Guadalajara, which was destroyed in the Spanish Civil War. Fiat’s collaboration with the French company Simca proved Fiat’s ability to manage complex international projects. Fiat’s experience in the semi-protected car market in Italy was seen as the most easily transferable to the one in Spain, both of which had, at the time, customers of low incomes and limited markets for cars, as well as similar road conditions. In Italy, Fiat dominated the market for vehicles under 12 horsepower, which would initially be the main market segment in Spain. The relative economic isolation of World War II damaged Italy and made Fiat interested in opportunities outside Italy, meaning that the negotiations with the Italian manufacturer could prosper more easily in favour of Spanish interests than with those from other countries. In 1947, the Banco Urquijo group had revived the S.I.A.T. project and in the next year the talks ended successfully with the signing of a three-part contract, with the understanding that the INI would hold a 51% controlling interest as well as a ruling act in the new company preserving a focused approach of the enterprise in the ‘national interest’. The Banco Urquijo group, although a minority share holder, looked forward to assuming a leading role in the future as soon as the company was privatesed. Partner car maker Fiat was offered a 7% share in exchange of its technical assistance. This way SEAT not only would be able to reinitiate the country’s economic recovery and as the largest employer in the 1960s and 1970s but would also contribute to the industrialisation of what was still a largely rural economy.

SEAT’s Barcelona Zona Franca site and laboratories.

Even though there were initial thoughts of locating in less developed inland cities like Valladolid and Burgos, it was decided that the company’s plant would be constructed in the duty-free zone area of the Port of Barcelona (Barcelona Zona Franca), which would offer better access to the Mediterranean shipping and the rest of Europe through rail and road connections across the nearby French border. Barcelona was after all a city with an industrial history that had built up expertise in complex industrial enterprises since the latter part of the 19th century; it was also the host location of many early historical Spanish car makers, like Hispano-Suiza and Elizalde, and subsidiaries of foreign car makers, like ‘Ford Motor Ibérica’ and ‘General Motors Peninsular’. Being an enterprise of vital interest for the national economy as well as an investment opportunity for Fiat’s expansion plans through the Iberian peninsula, SEAT benefitted from state tariff and tax exemptions and technical assistance from its foreign partner Fiat. The company’s first President was the industrial and aeronautical engineer, pilot and photographer José Ortiz-Echagüe Puertas, who came from the Spanish aircraft manufacturer Construcciones Aeronáuticas SAwhere he had held the position of CEO, and who in 1976 was meant to be named the Honorary lifetime president of SEAT.[53][54][55]