Serbia and Italian car maker Fiat signed on Wednesday a memorandum of understanding, which envisages strategic cooperation and joint investment to produce new cars in Serbia's state-owned Zastava car plant.
"Fiat has ambitions to start production of a completely new model in Zastava by 2009," said Serbian Minister of Economy Mladjan Dinkic, who signed the memorandum with Fiat's Vice President Alfredo Altavilla.
Dinkic said the deal envisages an investment by Fiat of up to 700 million euros (some 1 billion U.S. dollars) in the Zastava plant in Kragujevac, 120 kilometers southeast of Belgrade.
According to the memorandum, Fiat intends to begin manufacturing in Kragujevac by the end of 2009 a completely new model of Class A vehicles, and the envisaged scope of production is 200,000 cars per year.
In the second stage, by the end of 2010, Fiat is supposed to began manufacturing one more model of Class B, which would increase the overall production in Zastava to 300,000 vehicles a year.
Fiat and Zastava would form a strategic partnership in which Fiat will control 70 percent of the stake to Zastava's 30 percent, according to the memorandum.
Serbian Finance Minister Mirko Cvetkovic said that the memorandum was not binding, but that the agreement would most likely be signed on May 6, when a meeting would be held in Kragujevac between representatives of Fiat and the Serbian government.
Zastava, Serbia's only carmaker, produced 15,000 vehicles in 2006, way below its annual capacity of 60,000.
Source: Xinhua
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