The economic slowdown and sharp decrease in demand for cars in Europe has forced a major scaling back of Fiat's plans for the Zastava factory it is in the process of acquiring and the last generation Punto model, which was built at the plant before the change of ownership (above), is set to resume production.

The economic slowdown and sharp decrease in demand for cars in Europe has forced a major scaling back of Fiat's plans for the former Zastava factory it is in the process of acquiring and the last generation Punto model, which was built at the plant before the change of ownership (and badged as the Zastava 10), is set to resume production.

The newly-established company Fiat Automobiles Serbia has offered the enterprise Zastava Auto a contract to manufacture the Punto '188', which should start in March, ahead of the handover, reports Serbia's EM Portal.

The details of the contract and their adjustment were discussed by President of Fiat Automobiles Serbia Giovanni de Filipis, General Manager of Zastava Vehicles Group Zoran Radojevic, Head of Zastava Auto Zoran Bogdanovic, and Director of the Privatisation Agency Restructuring Center Aleksandar Ljubic. According to Zoran Radojevic, the existing capacities of the Punto production line at the factory in Kragujevac amount to 20,000 cars a year, but they can be doubled with small investments and engagement of more employees.

Smooth transition

“At the moment, the company Fiat Automobiles Serbia has neither property nor employees. The entire job regarding the property transfer to the new enterprise and employment of workers should be completed until April 15. Then we will start technical preparations for starting manufacture of this car model, and it cannot begin before June or July. Pursuant to this contract, Zastava Auto should manufacture Punto for the Italian-Serbian company, and the company will place the car to the market through Fiat’s distribution network. In this way, instead of waiting until July, we will start producing Punto in March already,” Radojevic explains adding that the factory will not be idle. However, he couldn’t tell us how many vehicles would be manufactured this year, since the contract was still being adjusted, and it would most likely be signed in about ten days.

According to Aleksandar Ljubic from the Privatization Agency, the production volume will be determined by the market. “It all depends on movements in the automobile market, the offer and demand. President of Fiat Automobiles Serbia de Filipis insists that the production should not be lower than the one stipulated by the basic contract, which is 7,000 cars. It is important that Zastava has capacities for much higher production, and if the market demands that, we will produce even 40,000 to 50,000 vehicles,” Ljubic claims.

No requests for a delay

In spite of many speculations that Fiat has requested or is going to request prolonging of deadlines for starting production of the new car at the Kragujevac factory, such a request hasn’t been submitted. Both Radojevic and Ljubic say that they haven’t received such a request. “All clauses of the contract between Fiat and the Republic of Serbia are being obeyed, and the planned tasks are being carried out in time by both contracted parties. This contract on production of “Punto” is going in that direction as well. At several “measuring” points we have concluded that the basic contract will be completely realized. In Kragujevac, with Head of Fiat Automobiles Serbia we have also discussed displacement of the equipment, as well as waste from the factory. We also talked about involvement of new companies in these jobs,” Ljubic underlines.

By the way, according to unofficial but reliable information, the Republic of Serbia has requested from Fiat to start production of the model “Topolino” at Zastava, but Fiat has concluded that this is not payable at the moment and is the reason for which the company offered Zastava Auto the contract on production of “Punto”.

Report courtesy of EM Portal