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The Ibiza Mk III (codenamed 6K) was the first Ibiza to be produced under Volkswagen Group management and used the underpinnings of the Polo Mk III (actually, the underpinnings of the Volkswagen Golf III). It suffered a little from brand identity issues on release. Originally seen as a cheap VW, the launch of the Cupra models and rallying success gave it a much stronger sporty image, which aligned with Volkswagen Group's acquisition of Škoda Auto as a budget brand.

The Ibiza's 1.0, 1.4, 1.6 and 1.8-litre petrol and 1.9-litre Diesel engines were the same as the Polo's. The Ibiza's running gear was also used in the SEAT Córdoba saloon, estate and coupé.

Under Volkswagen's ownership, Seat was marketed as a sporty and youthful brand whose cars were sold at competitive prices. The original Ibiza's problems with bad build quality and unreliability were rectified, as the Ibiza proved itself to be one of the best built and most reliable small cars in Europe.

The Ibiza was also produced in South Africa as the Volkswagen Polo Playa and also in Argentina.
 
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