Abstract
In Q408, the number of newly registered passenger cars fell by 4.1% as Serbian
consumer spending
began to be impacted by the economic crisis. The
National Bank of Serbia stated that the overall economy
shrank by 3% in
Q408. BMI forecasts a 1.6% contraction in 2009, and we expect domestic sales
of autos
to be negatively impacted. However, the market should still see
growth, driven by the extra production
provided by the new Zastava-Fiat
factory.
On January 30 2009, the Serbian government signed a deal with
Italian automotive manufacturer, Fiat. It
meant that 15,000 units of
Fiat' s Punto model will be produced in Serbia, beginning in March of the
same
year. This marks the first phase of the EUR700mn (US$900mn) agreement
that was originally made
between the parties in September last year. Under
the agreement, Fiat will own 70% stake in the Serbian
state-owned
carmaker, Zastava Automobili, with the government retaining 30%.
Serbian
Deputy Prime Minister Mladjan Dinkic revealed that that the cars will be made
in Zastava' s plant
in Kragujevac, central Serbia, where the manufacturer
currently produces its Zavasta 10 (a brand nearly
identical to the Fiat
Punto). As such, production of the Zavasta model will be replaced by at least
15,000
units of the Fiat Puntos, which are to be sold in the ' Serbian
market and in neighbouring countries' (a
spokesperson revealed).
Serbia' s co-operation with Fiat is hailed as the largest foreign investment
' so far' in the country and the
partners are looking to reach an annual
production target of 200,000 units by the end of 2010, and hope to
add
100,000 units each subsequent year. The partnership deal, reached last year,
gives Fiat a 70% stake in
Zastava in return for its EUR700mn investment in
Serbia.
The Serbian government is expecting the Zastava-Fiat joint venture
(JV) to lead to export-led growth in
Serbia. Fiat' s entry in Serbia will
also help to attract around 100 Fiat contactors, which will be investing
at
least EUR200mn in the country. Serbia' s Investment and Export Promotion
Agency (SIEPA) estimates
that increased export activity will lead to the
creation of some 10,000 direct jobs in the industry. The
partnership
between Fiat and the Serbian government alone will create 2,400 direct
jobs.
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