Wednesday, April 30, 2008

Fiat Signed MoU to Buy Zastava Car Plant in Serbia

Global auto maker Fiat SpA is going to buy the Zastava plant in Serbia. Fiat Puntos and Opel Astras are currently being produced there for the Southeastern Europe. Fiat has already signed a memorandum of understanding of the deal. It is reported that Fiat is contemplating to invest €700 million (US $1 billion) for the production of 200,000 cars in Serbia. Economics Minister of Serbia, Mladjan Dinki, indicated that the automobile giant had plans to begin the production of a new model in Zastava by 2009.

IHT reported:

Under terms, Fiat and Zastava would form a strategic partnership in which Fiat will control 70 percent of the stake to Zastava's 30 percent, said Dinkic, who attended the signing at the plant in Kragujevac, 140 kilometers southeast of Belgrade.

"This initiative represents a further step in Fiat Group Automobiles' strategy aimed at supporting its growth and volume aspirations," Fiat CEO Sergio Marchionne said in a statement. It is one of a number of target alliances and partnerships made with automakers and automotive suppliers over the last several years as part of Marchionne's strategy to share costs.

Fiat is one of the most renowned companies in automobile market throughout the world. Zastava may not be that much fame throughout the world, but in Serbia, it has fame as an automobile manufacturer. Now, let us see if Fiat and Zastava can make a strong partnership and become beneficial.