Contract on cooperation signed by Fiat and Zastava – assembling of 16,000 “punto” vehicles in Serbia per year

Yesterday, in Belgrade, Zastava and Italian Fiat signed the contract on business-technical cooperation, which implies that Zastava should start to assemble Fiat’s model “punto” in its factories in 9 – 12 months.

On the occasion of signing of the contract, it was pointed out that production of “punto” would start in Kragujevac in Autumn 2006 and that the annual capacity would be about 16,000 automobiles. In the following period, Zastava will carry out technological equipping of the factory for production of "punto" in accordance with the standards of Fiat. It is estimated that Zastava will have to invest about €15m in adaptation and technological equipping of the factory.

In the presence of Republic Minister of Economy, Predrag Bubalo, ambassador of Italy to SCG, Antonio Zanardi Landi, Mayor of Kragujevac, Veroljub Stevanović, and other guests, the contract was signed by vice president of Fiat, Egio Bara, president of Administrative Board of Zastava Vozila Group, Milorad Savićević, general director of Zastava, Zoran Radojević, and director of company Zastava Auto, which will be in charge of assembling works, Milosav Đorđević.

Before the start of production of "punto" in Kragujevac, complete automobiles of that model will be delivered to Zastava from factory Fiat mirafiori settled in Torino, where Zastava’s workers will be trained how to assemble "punto". On the occasion of yesterday’s signing of the contract on resuming of business-technical cooperation between Zastava and Fiat, it was said that Fiat’s automobiles, which are produced in Kragujevac according to the license of Fiat and bear Zastava’s symbol, will be intended for local market, as well as for the markets of surrounding countries - Macedonia, Croatia, Romania, Bosnia and Herzegovina, Bulgaria and Albania.
Signing of the contract created conditions for development of mutual industrial cooperation, as well as the opportunity for cooperation between companies from Italy and Serbia and Montenegro, which will be able, according to modern market criteria, to join production of car parts and production equipment, which, of course, means that they will be able to repay the former debts regulated by contract signed in July 2004.

After he had signed the contract, general director of Zastava Vozila Group, Zoran Radojević, said that the plan was that about 7,000 automobiles with Zastava’s symbol be produced in Fiat within next 9 to 12 months. Between 800 and 1,000 workers will be working on assembling of "punto" in Zastava in the first year. According to his words, remaining debt of Zastava to Fiat (amounting to €11m) will be repaid through sale, i.e. privatization of Zastava’s parts.

Investment means for modernization of Zastava’s units will be provided by the banks that have interest in this business arrangement.

The first ten models of "punta" with symbol of Zastava will appear in Serbia on October 10 when Days of Italy in Belgrade should start.