Seat is developing a new sports sedan to rival the Alfa Romeo 156.
Seat sources said the sports sedan would replace the current Toledo but would have a more distinctive design.
The new car could fit between the Leon hatchback and Seat's future sporty compact minivan.
Former Seat design chief Walter de' Silva styled the 156 when he was at Alfa Romeo. De' Silva was named head of design at VW's Audi brand group a year ago. The group also includes Seat and Lamborghini.
Volkswagen wants its Spanish brand to rise to the level of Alfa Romeo in terms of style and image.