Just 24 hours after Fiat officially previewed the new 'Grande Punto', news comes that production of the current Punto model is now destined for Serbia. Serbian Minister of the Economy - Predrag Bubalo - told reporters today that domestic car maker Zastava has successfully concluded intensive talks with Fiat Auto to assemble the long-running Punto under license, reviving a long standing tradition which has seen the Balkan carmaker building such models as the Fiat 600D and 128 under license.

The long drawn out negotiations between Fiat Auto, Zastava and the Serbian government, have now finally been completed. They had stalled - due to long standing debts that the Serbian carmaker still owes to Fiat - but contracts are now initialed, with a final signing scheduled for September.

Bubalo hopes that the Punto, complete with its Serbian badges and designations - can be presented officially at a Belgrade exhibition - “Italy in Belgrade 2005” - which is scheduled for October, and will bring Italian and Serbian business people together to explore new trading opportunities.

Under this new licensing agreement, Fiat Auto will deliver the current Punto model's components and bodyshells to the Zastava factory in Kragujevac for final assembly to take place. Bubalo told the press conference that as Zastava will now hold a full Fiat license, the agreement allows them to start manufacturing any components they wish to, and then to sell these into the spare parts supply chain. Given that more than six million Puntos models have already been built, this offers Serbian companies significant revenue opportunities.

The first batch of Serbian bound Fiat Puntos will be assembled at a Fiat factory in Italy, with Zastava staff assisting in the build process and receiving training. Bubalo added that all existing Zastava models will continue to be built, and that moves to restore links with GM's Opel brand were still on-going, and expected to be successfully resolved by the autumn.
 

Zastava - BRIEF HISTORY

Zaskava - Serbia's national automobile manufacturer - is based in the town of Kragujevac, just over 80 miles south of the Capital Belgrad. The Zavodi Crvena factory (which means 'Red Flag Plant') began its long collaboration with Fiat fifty years ago (in 1955) when it began assembly of the Fiat 1300, 1400 and 1900 models for sale in what was then Yugoslavia, as well as the other countries that made up the 'Eastern Bloc' group of nations. In the 1960s Zastava began building the Fiat 600D - which was badged as the 750 - and remained in production until 1981.

Zastava's most popular - an commercially successful - was the 4-door 55bhp Fiat 128 saloon , which started production in 1971, and although it suffered from terrible early build quality problems, it is still built today. The Zastava 101 (the local designation for Fiat's 128) was part of a new agreement with Fiat. Zastava also created a hatchback version, and both variants were exported to Italy and sold under the 'Innocenti' name. The company introduced the 'Yugo' brand name, and in the 1980s Yugo began to raise their quality standards and started to export - cheap, simple and reliable - cars into Western European markets. The Yugo 45 - based around the Fiat 127 - was the most popular export. Their final production model - the Yugo Sana which was launched in 1990 - was styled by no lesser designer than Giorgetto Giugiaro.

The regional wars of the early 1990s which saw the Yugoslav nation torn apart crippled the economy and the Yugo had all but vanished from the Western European markets by 1993. The factory was bombed by NATO during the Kosovo war at the end of that decade, causing extensive damage.

Zastava resumed car production in 2000 (when 15,000 cars were assembled and of these 4,000 were exported) and they have struggled on in recent years, still continuing to build a version of the Fiat 128, as well as developing several new models, including the reasonable successful 2.0-litre Yugo Florida (which uses Fiat's 2.0-litre unit drawn from the Brava/Bravo).