Automotive News Europe - January 2013 - 15

AUTOMOTIVE NEWS EUROPE

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Pushed by the International Monetary Fund to decrease its budget deficit, Serbia imposed a 30 percent deposit on new car purchases in 2011. That move hit the country’s retail market hard. A 2,500 euro down payment simply isn’t affordable for a customer that might earn only 350 euros a month, said Gerry Clarke, Fiat Automobili Serbia’s commercial director. Previously, private buyers were not asked to make a down payment, and they could finance their new car with a monthly payment of 90 euros or so over seven to eight years, Clarke said. But now only a few Serbs can afford a vehicle such as the 500L, which has a starting price of 13,550 euros. To attract Serbia’s entry-level buyers, Fiat sells an old, locally assembled Punto subcompact for 5,600 euros. The Punto Classic is the country’s bestselling model, with sales of 1,733 units in the first 10 months of 2012. With the help of the Punto Classic, Fiat is Serbia’s No. 2 automaker, trailing Skoda (See table, right).

Fiat invested 1 billion euros to refurbish an abandoned plant in Serbia. Modeled after Fiat’s Italian factory in Pomigliano d’Arco, the plant’s main facade has the Serbian translation for the slogan “The things we make, make us,” which was conceived by Fiat’s U.S. subsidiary, Jeep.

Skoda in front
Serbia’s leaders based on Jan.-Oct. vehicle sales (% market share)
1. Skoda 2. Fiat 3. VW 4. Hyundai 5. Ford Total
Source: SRPSKA

Market slump
New cars sales in Serbia have been declining since 2009
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
*January-October Source: SRPSKA

Rising production
Later this decade, the Kragujevac plant could challenge its annual production record of 181,000 units set in the 1980s, when Zastava was exporting the Fiat 127-based Yugo 45 subcompact to western Europe, North and South America. Following the breakup of Yugoslavia, the Yugo brand disappeared from most export markets by 1993, and in 1999 the factory was heavily damaged by a NATO bombing. The post-Yugoslav era has been difficult for Zastava, just as it has for most companies based in Serbia, which suffered from international sanctions. During that chaotic period, Zastava nearly halted production and failed to introduce new models. Zastava signed an agreement with Fiat in 2005 to produce the 2003 Fiat Punto, rebadged as the Zastava 10 in southeast Europe. In 2007, Serbia announced that Zastava would be privatized, and the following year Fiat took control of the company. It was a homecoming

2,856 2,583 2,113 1,562 1,530 20,546

13.9 12.6 10.3 7.6 7.5 -

of sorts. Fiat had launched Zastava in 1954 with a licensing agreement to produce the Fiat 1100B and 1400 sedans. After taking control of the plant, Fiat installed enough production capacity to make up to 186,000 units a year. Fiat produced an initial batch of 25,000 units last year, with plans to produce 140,000 vehicles in 2013. Of those, Fiat expects to export 40,000 minivans to the United States. Production of the European five-seat version of the 500L began in July, and the U.S. version will follow in February. In May, Fiat will add an SUV-styled model called the 500L Trekking, which will be offered in Europe and North America.

24,837 25,475 36,185 43,218 47,401 56,131 57,255 45,181 40,394 31,916 20,546*

In the second half of 2013, Fiat will add the 500XL, a seven-seat variant that is 200mm longer than the 4150mm fiveseat model. The 500XL is not planned for North America. Eventually the Fiat 500L and its variants will be exported to more than 100 countries. “This will be the first Fiat model exported to so many markets,” Ferrara said. And the Kragujevac plant will build them — not a bad turnabout for a factory that once seemed headed for oblivion.

JANUARY 2013

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Automotive News Europe - January 2013

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