Zastava Auto currently assembles the last-generation Fiat Punto under licence at its Kragujevac factory, a contract that was signed prior to Fiat buying the Serbian national carmaker.

Serbian Economy Minister Mlađan Dinkić says production of the new Fiat model at Zastava will begin in late 2009. “Fiat is considering placing the Zastava sign on the first model of the city car manufactured in Kragujevac,” Dinkić told Beta. According to him, the plan is for over 95 percent of Fiat’s output to be exported.

The minister said that it was planned for customs duty on vehicle imports to Serbia to be halved starting from January 1, 2009, as Fiat was not afraid of competition, while that duty would be abolished in 2010.

Reiterating that the contract between Serbia and Fiat on a strategic partnership would be signed in the first half of September, he said that that document had been synchronized in all its most important elements, though details concerning the scale of investment in infrastructure were still to be agreed. “Everything was effectively wrapped up in July, and the contract has 200 pages, together with the annexes,” said Dinkić, adding the the contract was of such significance that senior Italian government officials would be attending the signing.

The minister said that such a scale of investment was unprecedented for Serbia, since, he pointed out, the Italians would be investing over EUR 800mn, while the Serbian state would be investing around EUR 300mn in infrastructure over the coming three to four years. He said that the railway line from Kragujevac to Lapovo would be completely modernized, that a bypass would be built around Kragujevac, while other electricity sub-stations and gas facilities would also be built.

Report courtesy of B92