The motor-vehicle company Seat (Sociedad Española de Automóviles de Turismo) was set up by the government in 1949 under the umbrella of the National Industrial Institute (INI) with the participation of Fiat (see also motor manufacture). It formed part of an industrialization policy based on import substitution and self-sufficiency. For three decades the company had a protected market, the Seat car was ubiquitous in Spain, and Seat was one of the major employers in Barcelona, and the nucleus of several ancillary industries. In 1967 Fiat took a holding in the company but after substantial losses pulled out in 1981, leaving the state to find a new partner. The privatization of Seat was the most prominent disposal of a public company in the socialist PSOE government's privatization programme in the 1980s. An agreement was reached with Volkswagen (VW) in 1983, which finally led to a majority shareholding in 1986 and full ownership in 1990. The government argued that privatization provided access to international capital, to technological, logistical and commercial expertise and facilities, and achieved economies of scale. However, the company was only sold after a large part of the existing debts had been written off by the government, and the sale placed a significant part of Spain's industrial heritage under foreign control.
   Under VW the company thrived in the late 1980s, but then entered a period of crisis, as losses mounted and huge additional liabilities were discovered in 1993. The financial picture was exacerbated by the depreciation of the peseta against the Deutschmark and the sourcing of many components in Germany. This crisis brought Seat near to closure, led to a reduction in the workforce, from almost 24,000 employees in 1988 to some 12,000 in 1996, and precipitated the cessation of car assembly at the Zona Franca site in Barcelona.
   Initially, production of Seat cars was centred on this site, but in 1974 Seat took over the former British Leyland plant in Landaben (Pamplona), which became its second major production centre. Following the takeover by VW a major investment programme was begun, including a completely new assembly plant in Martorell, Barcelona. Closure of the Zona Franca plant in the mid-1990s concentrated Spanish production at Martorell, while in 1996 vehicles badged with the Seat name began to be produced in Portugal under a joint venture with Ford. As part of the negotiations over the future of VW in Barcelona, the company obtained assistance from both the national and regional governments, with the approval of Brussels. In return, VW planned to promote the Zona Franca site as a components supply complex, and began development of a European vehicle design centre in Sitges in 1994. The Landaben plant was also substantially modernized in the early 1990s to produce the VW Polo, and its ownership transferred from Seat to VW. By 1996 Seat was one of the "marks" of VW, along with Audi and Skoda, its future dependent on the international investment strategy of the parent company, the evolving economics of production in the motor-vehicle industry and the on-going relationship between VW and the government in Spain.
   Further reading
   - Salmon, K. (1995) The Modern Spanish Economy, 2nd edn, London: Cassell (the development of Seat and its position within the motor-vehicle industry in Spain is covered in pp. 192–8).

Encyclopedia of contemporary Spanish culture. 2013.

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