After intensive top level talks over recent days the Fiat Group is now in the final stages of taking charge of the Zastava car company.

After intensive top level talks over recent days the Fiat Group is now in the final stages of taking charge of the Zastava car company and is set to start building two new models in its Serbian factory. The plan calls for Fiat to raise production at the Kragujevac to more than 150,000 cars per year by early 2010, with 95 percent of these being destined for European markets.

It is reported that Fiat will invest over 300 million euros in Zastava if it seals a deal to take charge. "Fiat is interested in a strategic partnership with Zastava through a joint investment with the Serbian government," an official Serbian government statement early yesterday revealed. Then last night the Minister for the Economy Mlađan Dinkić told reporters that talks between a delegation from Fiat, top officials at Zastava, and the Serbian government had "reached the final stage" and that "an agreement on strategic partnership will be signed with the company in a couple of days."

"That will be an agreement on strategic partnership between Fiat and the Republic of Serbia, which I will sign personally, while a new government should verify it," commented Dinkić in a live broadcast on TV last night, adding that a second delegation from Fiat is expected today. The first delegation was let by Stefan Ketter, the Group Head of Manufacturing; today's party will include further senior management figures.

Starting last December, the government invited tenders for the state owned carmaker that produces only a trickle of cars today and requires major investment, having failed to re-establish itself after bombing by NATO in 1999 caused extensive damage to its factory. However the official tender results were but back to May due to national elections caused by a collapse of the government and in the meantime Fiat has presented innovative proposals to take Zastava forward. Dinkić said that the Fiat plan would mean "a revival of Zastava Cars" and offered "a completely new type of privatization." The factory currently assembles and exports the last-generation Fiat Punto (Series 2) model under licence, badged as the 'Zastava 10'.

"In the first months, the company plans to produce 50,000 cars and after that Fiat would produce a completely new type of car, which has yet to be released in the world market," added Dinkić; this second model will be the new small city car, based on the Panda.