SEAT founded by Instituto Nacional de Industria
History
Establishment
Spain is the world's eighth-largest manufacturer of automobiles. Its car market stands among the largest in Europe. However, this has not always been the case; in the first half of the 20th century, Spain's economy was relatively underdeveloped compared to most other Western European countries and had a limited automobile market. In this period, car production was limited, with 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.
The lack of interest shown by the foreign firms in the weakened post-civil war Spanish market opened an opportunity for local interests. 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.) to establish 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   followed a decision taken by the Franco government on January 3, 1942. 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, finding a foreign partner that would contribute technically and with its models in the early years in exchange for cash, shares, bonds, and royalties became the course of action. 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.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 600,000 shares of 1000 pesetas each, and in a time when the country needed 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 Fiat to form a partnership with a foreign ally to bring to life Spain's major car manufacturer. 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 semiprotected 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 those from other countries. In 1947, the Banco Urquijo group revived the S.I.A.T. project. 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 shareholder, looked forward to assuming a leading role in the future as soon as the company was privatised. Partner carmaker Fiat was offered a 7% share in exchange for its technical assistance. This way, SEAT would not only be able to reinitiate the country's economic recovery as the largest employer in the 1960s and '70s but would also contribute to the industrialisation of a largely rural economy.