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.

Fiat Making Steady Profits in Auto Sector

For any auto company, making profit in this age is a tough challenge. Yes, making profit may not be that tough but having consistent performance in the market is a tough challenge. So, Fiat bosses should celebrate the news that its auto unit is improving consistently.

IHT reported:

Fiat on Thursday reported an eighth consecutive quarterly profit on rising sales of the Grande Punto hatchback and increased truck demand.

Fourth-quarter net income rose to €452 million, or $586.8 million, from €38 million a year earlier, the company said. Sales increased 5.5 percent to €13.9 billion. The auto unit reported an annual profit for the first time in six years.

Fiat, based in Turin, Italy, will introduce the new compact Bravo model next week in an effort to win more customers in the most competitive segment of the European car market. The chief executive, Sergio Marchionne, brought the group back to profit in 2005 for the first time in five years with higher sales, cost cuts and changes in top management.

There has been a positive influence on the price of shares of Fiat. It has been increasing consistently for nearly a year.