"We've crossed the valley and are now climbing back up the mountain," SEAT chief Andreas Schleef told Reuters in an interview during the Geneva auto show.
He aims to improve results and grow unit sales in 2006 by an unspecified amount over the 422 000 cars delivered to customers last year. But Schleef said it would be difficult to return to profit this year after posting a net loss of $74.7 million in 2005.
While the goal remained to contribute a significant profit to Volkswagen group by 2008, Schleef said further spending to expand the model line and roll out new derivatives would impede top returns.
"It isn't realistic though to expect delivering a record profit in 2008 already since we still have considerable investments yet to make," he said.
Its all-time best contribution to Volkswagen was an after-tax profit of 233 million euros from 2001.
Volkswagen acquired 75% of SEAT in 1986 and expanded its stake to almost 100 percent in 1990.
Speculation that Volkswagen was considering the disposal of SEAT or the closure of its Martorell plant near Barcelona flourished following an unsourced report in Der Spiegel magazine in September that the brand had been given a deadline to improve results in order to justify further investment.
Audi Chief Executive Martin Winterkorn, who oversees SEAT as head of the Audi Brand Group, has publicly reinforced his commitment to the brand, and VW said in November it would invest a further 700 million euros in SEAT over the next three years.
SEAT's Schleef said the brand continued to remain strong in its domestic Spanish market but a problem remained in the rest of Europe. Roughly 9 out of 10 SEAT cars are sold on the continent.
While it remained strategically critical for the brand to reduce its dependence on the European market, Schleef said it would be another three years before SEAT would look to move into uncharted territory such as the United States or Asia.
"We first have to do our homework in Europe before we can start to finance our expansion into other markets," he said.