Iveco is to follow Fiat back into Serbia, with the Fiat Group's trucks-to-buses manufacturing division set to build a new plant in the Balkan country; with the return of Iveco being set to revive a tradition of assembling its vehicles in Serbia.

Iveco is to follow Fiat back into Serbia, with the Fiat Group's trucks-to-buses manufacturing division set to build a new plant in the Balkan country. The return of Iveco will revive a tradition in Serbia, in the 1980s Zastava Trucks (Zastava Kamioni in Serbian) assembled the Italian firm's trucks under its own brand name in a deal similar to that which saw the Kragujevac-based carmaker building Fiat models under licence. In fact Zastava Trucks, which traces its roots back to WWII, has a tradition with the Fiat Group that stretches back to assembling the Campagnola and AR-51 jeeps.

Iveco still retains a minority interest in the truck facility in the country, and Zastava trucks are also still built in Hungary fitted with Iveco engines. At Kragujevac the Iveco Daily van is built under licence. Now Iveco is set to buy out the majority shareholding of Zastava Trucks and build a brand new facility to manufacture trucks and buses focused on the growing Eastern European markets. Iveco's comprehensive product range, which focuses on lower-cost, user-friendly vehicles, is proving highly popular in the Eastern European countries and will bolster a bus manufacturing operation based in the Czech Republic.

The news follows closely on the completion of a deal between Fiat and the Serbian government that has seen the Italian firm purchasing the remaining operations of Zastava Auto, the state-owned national carmaker after beating off rival interest. Fiat has unveiled ambitious plans to build two new models at the factory, the first of which will be a low-cost car that will replace the 'Palio' family in Europe. Rumours from within Serbia during the last week have suggested that it could be marketed as part of a proposed new low cost brand, similar to Dacia, and branded under the revived Zastava name. This model will be marketed in Eastern Europe from late next year and will be followed a year later by a small urban car, dubbed as the 'Topolino'.