Fiat has paid the 98 million euros due under the terms of the contract to the account of the joint company founded with the Serbian government, Fiat Automobiles Serbia; the Italian carmaker already paid 2 million euros to the newly formed firm.

Fiat has paid the 98 million euros due under the terms of the contract to the account of the joint company founded with the Serbian government, Fiat Automobiles Serbia, reports B92. The Italian company has already paid 2 million euros to the newly formed firm.

Fiat is now the majority owners of the joint company with 67 percent of the capital, while the Serbian government retains 33 percent. According to the signed annex agreement, Fiat will pay another 100 million euros next year, of a total of 700 million euros that is planned.

The production of two new Fiat models is expected to begin in the fall of 2011 in the Kragujevac-based Zastava factory. This is the first investment made by Fiat in the factory since the company and the Serbian government signed an agreement for joint investments in the automobile factory in September of last year.

Kragujevac Mayor Veroljub Stevanović told journalists that Kragujevac has regulated all issues related to property. He said that industrial and free customs zones in Kragujevac will have to be organized, namely the Korman Polje zone, which will be handed over to Fiat in six months. Stevanović said that he will be heading the team that will be following the realisation of equipping Korman Polje in order for all obligations to the Italian company to be fulfilled by the given deadline. The free zone was set up by the contract for joint investments between Fiat and the Serbian government for producing Fiat automobiles in Kragujevac-based Zastava manufacturer.

Government officials and Fiat signed an annex on December 24 for investing in the joint company, which would make Zastava part of the Italian company. The annex calls for investments of 700 million in new equipment and the modernization of the factory for a capacity of 200,000 vehicles per year, and the production of two new models of automobiles in Kragujevac, which are expected to be begin production in the second half of 2011.

The new models will first be presented at one of the largest European car fairs, it was also announced. One model is expected to be in the B-class, while the other would fall under the C-class category, according to reports. Fiat intends to produce cars in Kragujevac that will be exported to the European and U.S. markets. The government and Fiat signed a contract for join investment in the Zastava factory on September 29, 2008. The Fiat company will have 67 percent of the capital in the new joint firm, while the Serbian government will have 33 percent. The company was founded on October 14, 2008.

Report courtesy of B92