Fiat’s delayed and scaled back plans for a key production hub in Serbia are rapidly gathering pace again with the news that it has submitted plans to the Serbian Privatisation Agency for a new industrial zone in Kragujevac that will include other divisions within the Fiat Group as well as a supplier park. The total investment of these projects, which numbers 14 Italian companies, will be around 240 million euros, according to the local media.

Last year Fiat prepared ambitious plans for Zastava, the state-owned Serbian car maker. Zastava has had a long association with Fiat and at the time was assembling the Punto Classic (Series 2) under licence, rebadged it for the local market as the Zastava 10. A Memorandum of Understanding was signed in April 2008 between Fiat and the Serbian government and a 700 million euro investment deal was announced on September 29. The deal called for the Serbian government to hand over 100 million euros, a 50 million euro loan, Zastava’s fixed assets, additional land and offer a 10 year tax exemption, which was valued to the tune of 200 million euros. As well as Fiat group Automobiles, Magneti Marelli and Iveco were both slated to build their own factories. A joint company was incorporated by Fiat and the government under Serbian law on October 14, 2008.

However the global financial crisis was already gathering pace by then and it was hitting all carmakers in particular hard as consumers shunned the showrooms as they felt the effects of the economic pinch. This caused Fiat to put on hold its production plans for Serbia and the Punto Series 2 which had been jettisoned in mid-November as the factory prepared to gear up to build two all-new models (a new sub B compact referred to as the 'Uno' and a new sub A city car dubbed the 'Topolino') was hurriedly put back into production at the beginning of February. Fiat will now invest 200 million euros.

According to the plans that Fiat has just submitted there will be fourteen Italian companies setting up operations on 35 hectare plot of land, which will include the Fiat Group's Magneti Marelli components-and-electronics division. Meanwhile a further 20-25 hectare parcel of land will be allocated to Fiat's Iveco unit which will build a factory to produce buses with an annual capacity target of around 2,200 units. The Kragujevac factory is now the sole European production home of Punto Series 2 as the Italian lines are wound down and as well as EU markets Fiat foresees exports of the long-running B-segment car into other Eastern European markets as well as Russia. The bounce in the European new car markets has revitalised the deal with Zastava and Fiat intends to stick to plans for a 200,000 unit capacity factory.