Fiat will begin investing in new machinery for the Zastava car manufacturer in Kragujevac this year as part of initial preparations for the manufacturing of a new model in keeping with the strategic agreement between Serbia and the Turinese company, said Serbian Economy Minister Mladjan Dinkic. He added that talks on the dynamics of the investment would start after Fiat completes talks on the alliance with Chrysler at the end of this month.

Originally Fiat had planned to build two new models at the Zastava factory, the 'B-compact' replacement for the current Palio, widely dubbed the 'new Uno', and an all new city car based on the Panda floorpan and called the 'Topolino'. These plans were quickly put on ice due to the outbreak of the global financial crisis and the resulting downturn in car sales. Now Dinkic believes production of at least one of these cars is likely to get back on track in Serbia next year.

Meanwhile, according to Dinkic, the sale of the Fiat Punto Classic model, assembled in Kragujevac, will begin this week. He stated that instructions for the purchase of new cars in exchange for used vehicles are now posted on the internet site of the Economy Ministry. "The manufacture of the Punto Classic, which will bring a revenue of 722 euros per vehicle to Serbia, is only the first step towards the manufacture of the new model," Dinkic stated. He set out that it was agreed with Fiat to begin investing into the production process which will boost the daily output of vehicles to around 3,000 units.

Dinkic announced that domestic component manufacturers would in the second half of the year be introduced into the manufacturing of the Punto Classic and this will, as he put it, automatically increase the profits of the Serb side from the manufacturing of the the car in Kragujevac. "The intention is to involve domestic car-part manufacturers in the production of the Punto Classic and as many as 15 companies are a part of this process," Dinkic pointed out, mentioning the car battery plant in Sombor, the Trayal tyre factory in Krusevac and US Steel Serbia. Dinkic noted that new contracts would be signed by July with Serbian providers who are able to meet Fiat's standards.

Speaking about the announced export of the Punto Classic to Russia, Dinkic said that even without this deal the market for the Punto will be large in view of the interest of people in Serbia, in the former Yugoslav republics, as well as the possibilities for exports to the CEFTA countries, Turkey and Africa.