The company was founded in 1954 as "Barreiros Diesel S.A." by Eduardo Barreiros and based in Madrid. Established initially as a producer of diesel engines, at Ourense the company then expanded to make commercial vehicles, reaching licensing agreements with French Berliet (truck cabs), British AEC (buses and coaches), and German Hanomag (agricultural tractors) and Vidal & Sohn Tempo-Werke GmbH (light vans and trucks), all of them driven by Barreiros's own engines. Additionally a pay-in-kind contract with Polish Star was active in the late 1950s, by which engineless Star chassis-cab trucks were exported to Spain, while Barreiros engines were sent to Poland; the whole resulted in Barreiros-engined Star tractors being sold in China (and Polish trucks in Spain).

Later on Barreiros branched out into the production of passenger cars by means of cooperation (and capital links) with the Chrysler Corporation. An agreement was reached with Chrysler in 1963 to build the Dodge Dart, allowing the company to enter the car market. Sold as the Barreiros Dart, it had modified front styling, a four-speed gearbox, and all-around disc brakes. During that time, the Spanish automobile market was strongly protected, making entering it effectively only possible by domestic manufacturing. As the 1960s progressed, the range was extended with some smaller models from Chrysler's French subsidiary, Simca. The Barreiros-made Simca 1000 was launched in 1966, and later the Simca 1200 joined the range (in fact the French Simca 1100, but with a bigger standard engine for the Spanish market).

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