Zastava will finalize deal to assemble Punto in September

BELGRADE – Serbia’s sole car manufacturer Zastava is due to sign a final agreement with Italy’s Fiat in early September to start assembling its top-selling Punto car, officials said. Economy Minister Predrag Bubalo told Serbian media late on Thursday that the agreement had just been signed in Turin, with the final deal due in September. «The agreement envisages a full license to assemble Punto at the Zastava plant. Gradually, Zastava will start producing each part of the Punto locally,» Bubalo said. As a first step, Zastava workers would be sent to Italy to train alongside Fiat staff. Zastava is expected to assemble between 5,000 and 8,000 Puntos a year, enough to cover Serbia’s estimated annual demand for that particular car. The Puntos would retail at 8,000 euros, or 200 euros more than an equivalent Balkan-made car in its class, the Logan, produced by Renault’s Romanian unit Dacia. The deal comes a year after the Italian company agreed to write off 72.5 percent of a 42-million-euro debt claimed against Zastava. Serbia’s troubled car-to-weapons producer needs to repay the remaining 11.5 million euros by the end of 2005. The agreement will not interfere with Zastava’s search for partnerships to assemble cars or produce spare parts with other carmakers, Bubalo said. One prospective partner was Opel, the German unit of General Motors, he said. «I recently visited Opel and began talks on renewing cooperation with our industry. I think we will see the first results of the talks in the autumn,» he added. Based in Kragujevac, some 130 kilometers south of Belgrade, the Zastava factory suffered an estimated 175 million euros in damages during NATO air strikes in 1999. Zastava’s car production unit employs 4,500 workers and last year produced 13,500 cars, well below the planned annual target of 31,000 vehicles and its capacity of 60,000 cars. They still produce the basic Yugo car, first launched in the 1980s, which retails almost exclusively in Serbia, making up a half of all new cars sold in the country.

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