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The third generation was introduced in 2004, and it is completely different from the previous two. Abandoning the sedan format, the Toledo Mk III has a very controversial design, penned by Walter de'Silva. It is a compact MPV with the Altea's front section and a rear end inspired in the not very successful Renault Vel Satis, paying homage to the original Toledo's hatchback/sedan rear. All pretense of a sporty identity was thrown out, in favour of a more upscale and alternative image. A large 500 L DIN boot is its most interesting feature. Under the bodywork, the SEAT Toledo uses the same underpinnings as the Volkswagen Golf Mk V.

All engines are Volkswagen Group-sourced. There are two diesel engines: the 2.0-litre TDI engine with 140 hp, 1.9-litre TDI with 105h p. On the petrol side, there is a 1.6-litre engine with 100 bhp and a 2.0-litre engine with 147 bhp.
 
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