March 1, 2011

The custody battle for the Ritmo.

Fiat has been tied to the Seat (Sociedad Española de Automóviles de Turismo) name since the company was born in 1950. The idea came from Spain’s Franquist government who hoped the brand would put the country on wheels. In the early days Fiat held 7% of Seat, miscellaneous Spanish banks held 42% and the remaining 51% belonged to the Instituto Nacional de Industria, a branch of the Spanish government.

Seat got off to a discrete start: they sold their first car in 1953, the Seat 1400. It was an exact replica of the Fiat 1400 and completely out of tune with the needs of the majority of Spain’s population at the time.

Things took a turn for the better in 1957 with the launch of the Seat 600. It was a Xerox copy of the Fiat 600 launched two years earlier on the other side of the Mediterranean and it was precisely what Spain needed to motorize its population. Sales skyrocketed; the 600 became so popular that certain dealers even had to turn down orders. The 600 spawned some interesting versions reserved for the Spanish market, including the four-door 800 and the 600 Formichetta, but those are a different story for a different time. Throughout the 1960s and the 1970s Seat continued to build replicas of Fiats such as the Seat 850, the Seat 124, the Seat 127, 128 and 131.

When Fiat launched its highly-anticipated Ritmo in 1978 they gave Seat a version of it as well. On the outside the biggest difference between the two was that one had a Fiat badge and one had a Seat badge. On paper, the Seat borrowed its gasoline engine from the 124’s parts bin. The diesel engines were the same. The Ritmo was sold as the Seat Ritmo in Spain and as the Fiat Ritmo throughout the rest of continental Europe. It was dubbed the Fiat Strada in the UK and in North America.

By the late 1970s Seat had reached a comfortable cruising speed and enjoyed healthy sales but all was not well under the surface. The second oil crisis in 1979 had hit them hard and their expansion strategy had left them with heavy debts. Fiat refused to inject more money into the company; instead, they wanted the INI to help them restructure the company so they could later buy it entirely. When the INI rejected Fiat’s offer, the latter sold off its shares in the company for the symbolic price of one peseta per share. When all was said and done, the INI owned 95% of Seat.

The problem that arose is that Seat’s lineup consisted entirely of Fiats built under license and it wasn’t clear whether or not they could still produce them after the divorce. Fiat knew that refusing to let Seat produce these models would kill the Spanish company so the two came to an agreement that they signed in 1981: Seat could keep the Panda, 127 and Ritmo provided they redesigned them inside and out, including renaming them. Seat did just that and the cars became the Seat Marbella, the Seat Fura and the Seat Ronda. All had minor aesthetic differences to set them apart from their Fiat counterparts but the Fiat influence was clearly visible.

In August 1982, while Seat and Volkswagen were busy mulling over a potential collaboration, Fiat was drafting a letter to Seat to inform them that they were not satisfied with the changes they had made to the Ritmo. An article published in Spanish newspaper El País on November 11th, 1983, claims that Seat made several attempts to contact Fiat and discuss the problem but Fiat never responded in writing. Instead, on November 17th, 1982, Fiat filed a lawsuit against Seat in a Parisian court. The court accepted the lawsuit and notified Seat of it on November 25th.

The judge selected for the lawsuit was Italian lawyer Franzo Grande Stevens. Seat's first move was to request a different judge on the grounds that Stevens was part of Fiat’s board of directors and would be unable to deliver a fair verdict. Seat got its way and a panel of three judges (from France, Spain and Switzerland) was appointed to the trial. Seat also filed a counterclaim against Fiat, accusing them of trying to stop them from exporting cars.

Fiat noticed they were losing ground and rephrased their arguments against Seat. Their problem with the Ronda was that while Seat had sufficiently redesigned the front and rear, the middle section of the car was still too similar to the Ritmo. Seat had no arguments to defend itself against that claim: the side of the Ronda was very similar to the Ritmo. One could lift a door from a Ritmo and fit it on a Ronda.

Seat was determined to win and instead of focusing on what was similar, they focused on what was different. They took a black Ronda and painted in yellow every exterior difference between the Ritmo and the Ronda. An El País journalist who covered the trial claimed that the result was spectacular.

The trial carried on with people traveling to Paris from either Spain or Italy to personally testify for one side or the other. Several important folks in Fiat were marked absent including Umberto Agnelli, future president of Fiat, and Cesare Romiti, general director of Fiat at the time and the man who orchestrated the company's purchase of Alfa Romeo from the Italian government.

In the end the ruling was kept secret but the court sided with Seat, saying they had modified the Ronda enough to keep selling it. The ruling also meant Seat was free to export it where they pleased, which they did, but the Ronda was not particularly successful outside of its native market. The Seat Malaga, a mix between an Ibiza and a Ronda, benefitted from the court's decision and kept the same doors as the Ronda.

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