Zastava, Fiat in deal for Punto assembly

BELGRADE – Serbian car maker Zastava signed a deal with Fiat yesterday to assemble the Italian car maker’s top-selling Punto car, getting a much needed boost after a decade of failing to find a strategic partner. The plant in Kragujevac will assemble 16,000 cars a year for sale in Serbia and other Balkan countries. Talks started in 2004, after Fiat wrote 72.5 percent off a 42-million-euro debt owed by Zastava. The remainder is due to be paid by end-2005. «For Fiat, this is a way to speed up the process of reimbursement of the old debt,» Ezio Barra, Fiat’s vice president for business development, told Reuters. «We also believe that giving Zastava some new product for the market will help it to privatise more easily,’ he said. Fiat will keep on making Puntos for at least another year. «The production of (the) Punto in Italy will continue. We have not yet decided for how long, but it will for sure continue until 2007. The production will continue in our plant in Mirafiori, while we can supply to Zastava our production line from Termini Imerese,» Barra said. One thousand jobs The Serb-made Punto will look and drive like the original Italian-made car, either with a 1.2-liter petrol engine or a 1.9-liter diesel engine, but retail under the «Zastava 10» brand. It will sell for around 8,000 euros ($9,722), 200 euros more than the equivalent Balkan-made Logan by Renault’s Romanian unit Dacia. Zastava’s general manager, Zoran Radojevic, said Zastava would invest 15 million euros in organizing the Punto production within one year, offering work to nearly 1,000 people. Until then, it hopes to get a loan from Italy’s Banca Intesa to pay for importing 7,000 Zastava-badged Puntos, Zastava’s CEO Miodrag Savicevic added. The agreement with Fiat will not interfere with Zastava’s search for partnerships to assemble cars or produce spare parts with other carmakers. The company has said talks are still going on with Opel, the German unit of General Motors. Some 130 kilometers south of Belgrade, the Zastava factory suffered an estimated 175 million euros of damage during NATO air strikes in 1999. It employs 4,500 workers and last year it made 13,500 cars, well below its capacity of 60,000. It still produces its signature Yugo car, a compact first launched in the 1980s. Fiat, emerging from the worst crisis in its history, has said it wants to work with other carmakers on specific projects to reduce risks and cut costs, part of a plan to return to profit by 2007 from a record loss three years ago. Barra said another business deal, with India’s Tata Motors Ltd, was expected very soon. «There are many discussions, I think we will announce something very soon. Cooperation is a little bit larger than this cooperation, but I cannot discuss it today,» Barra said. Asked if soon meant in a matter of days, he said, «Yes.»

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