The Ibiza Kit Car marked SEAT's return to world rallying for the first time since the Group 4 124-1800 heroics on the 1977 Monte-Carlo Rally, with the Spanish works cars third and fourth overall. The Ibiza Kit Car was probably not the most powerful F2 rally car, but it was the best all-rounder and surely the most successful, as SEAT won the 2-Litre FIA World Rally Championship for Makes three years in a row, from 1996 to 1998

The car was homologated on January 1996, after a year of development. During 1995, SEAT Sport developed the Ibiza Kit Car while competing in some world rally championship events with the Group A Ibiza, which was the basis of the Kit Car and had made its debut in the WRC in October 1994. The Ibiza Kit Car made its debut as a zero-car (the course car that runs the special stages before the first competition car) in the 1995 Catalunya-Costa Brava Rally, driven by SEAT driver Erwin Weber.

The Ibiza Kit Car was powered by a 2-litre engine derived from the 1.8 16v Gr. A power unit. It was prepared by Mader and had a power output of 255 bhp, compared with 195 for the Gr. A. Two engine types were developed, for tarmac or gravel, the first one more powerful at high revs and the second one giving more torque. The Ibiza Kit Car WRC program coincided with the arrival of Jaime Puig as SEAT Sport's managing director, whereas the team's chairman was engineer Vicenç Aguilera, the man in charge of SEAT Competición when the Spanish team made it to the podium in the 1977 Monte-Carlo Rally. During the three-year period of the Ibiza Kit Car in the WRC, around one hundred SEAT Sport members were part of the rally team.

The Kit Car's immediate success clearly demonstrated the virtues of the excellent base of the SEAT Ibiza, and SEAT clinched the title at the first attempt, a feat no other manufacturer had ever achieved. That said, the 1996 season proved eventful, mainly due to the bad luck of Jesús Puras, the leading driver - he achieved one victory, in Portugal, but retired in two other rallies when leading. The podiums of Erwin Weber and Mia Bardolet, and the points of Ferran Font with a Group N Ibiza (a production car), contributed vitally to SEAT's title.

SEAT Sport took part in the eight 2-Litre WRC rounds: Monte-Carlo, Portugal, Tour de Corse, Argentina, New Zealand, Australia, Catalunya and Great Britain. SEAT was crowned in the last rally of the season, the UK's RAC, where Harri Rovanperä competed in his first WRC event with SEAT. The Finn driver was fourth on his debut.

After winning the championship in 1996, a season that actually should have been an apprenticeship period, SEAT totally dominated in 1997, with eight straight victories of Harri Rovanperä (6) and Oriol Gómez (2). The successful run coincided with the debut in mid-1997 of the Ibiza Kit Car E2, designed under the guidance of Benoît Bagur - Rovanperä and Gómez achieved a 1-2 on the car's debut in Argentina.

Inspired by the success of the Ibiza Kit Car, SEAT decided to produce a sporting version of the Ibiza, a Kit Car replica, named CUPRA (Cup Racing), an acronym that would go on to be famous. The Ibiza CUPRA, launched in October 1996, could be described as “a road Kit Car with top-of-the-range equipment”. It was the first member of a family that nowadays embodies its sporting character in the CUPRA make.