The Fiat Punto Series 2 model is currently being built by Zasatva, in 5-dorr format, at its factory located in Kragujevac; more than 10,000 units of the B-segment hatchback have been assembled there since production resumed in the spring.

A year and a half after a deal on cooperation and investment was signed between Fiat and Zastava, an annex to the contract will establish a joint company, reports Serbian news agency B92 today.

Fiat Automobili Srbija (Fiat Automobiles Serbia) will be set up on November 10 in Kragujevac, according to media reports in Belgrade today, citing sources close to the Serbian government. This document will define the level and dynamics of investments into the new company in which the Italian carmaker and Serbia will hold 67 and 33 percent stakes respectively.

When the deal goes through, Fiat will take over the Kragujevac-based company's car producing plant. The Italians will also take over the company's assets and facilities when they make a 100 million euro payment toward the new company's founding capital.

The world economic crises delayed the implementation of the agreement for almost ten months, reports said. According previous announcements, Fiat was expected to invest a total of 800 million euros, while Serbia's share was agreed at some 300 million euros. A payment smaller than planned does not mean that Fiat is cutting down the investments but only that they will make the payments successively in order to follow the dynamics of jobs in the Zastava car factory, said the media reports today.

Technical details will be agreed during the next two weeks, and negotiations are expected with Fiat's management regarding the number of workers "to be hired in the first phase". According to the contract, a total of 2,433 workers will be employed in several phases – 1,000 initially, and another 700 in six months to a year. Considering that 2,700 people are already employed by Zastava, the surplus 300 "should find work in Italian companies which are going to manufacture car parts for Fiat here".

The factory union, meanwhile, is requesting that 1,740 workers be transferred to the new company during the fist half of November. A majority of the remaining 1,000 could be hired next year to relocate the rest of Zastava production lines and to build and equip the new car manufacturer, union representatives were quoted as saying. Negotiations on these requests have started this week and are set to last several days.

Report courtesy of B92.