Fiat and Serbia Agree on Zastava Sale Completion

By Brendan Moore

12.23.2009

Zastava logoFiat’s CEO, Sergio Marchionne, has committed to purchasing a majority stake in Zastava Automobili, according to a statement issued from the office of Boris Tadic, president of Serbia.

Serbia and Fiat ginned up a 700 million euro ($1 billion USD) joint venture early last year, in which the Turin-based manufacturer acquired 67 percent of the Zastava carmaker, while the government in Belgrade kept the remainder.

Fiat has held off on actually writing the check for their part of Zastava, though, because of last year’s swoon in the wordwide auto market, leaving the nascent joint venture to be financed and operated by Serbian government aid.

According to Tadic’s office, Fiat will make the first payment of 100 million euros before the end of 2009, and then make quarterly payments against the balance going forward.

Zastava is not a familiar name to many people in North America, but their former progeny, the Yugo, holds a special place in the annals of cheap car history for some. The Yugo was a former Fiat model.

In that same vein, Fiat did allow the Zastava factory to produce the Fiat Punto under license, which they did, to the tune of 15,000 units, in 2009. The agreement called for the cars to be offered for sale only in Serbia and the Bosnian Serb sector of nearby Bosnia. All of the cars were snapped up by buyers in those areas.

Zastava Automobili is Serbia’s largest auto manufacturer.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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4 Comments

  1. Fiat is getting market share and low-cost manufacturing capacity on the cheap, with the Serbian government the fallback guy if things don’t work out. And if they do, production can be shifted to this low-cost location, away from the current high-cost production sites.

  2. Zastava, I thought they went under.

  3. I, for one, look forward to a new Dodge Yugo in the future.

  4. Good move on Fiat’s part. Lots of upside, not much downside.

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