Yugo rides again – as Fiat

The scramble of car manufacturers to get a foothold in the low-wage countr5ies of Eastern Europe has almost come to an end but there is one old Communist factory still ripe for development : Zastava. This was the national car company of Yugoslavia until the break-up of that country and now falls in Serbia. Zastava was established in 1950s to produce Yugo versions of Fiats, which were sold in western markets at rock-bottom prices. That was just as well because the quality was appalling. Recently the factory has been bombed by NATO forces but managed to resume production of the old model Fiat Paunto. The Serbian government made it clear that it was looking for a foreign investor to take over the factory in Kragujevac. Volkswagen showed interest but the Serb’s orginal collaborator Fiat seems more likely to make a deal. On 30 April, Fiat signed a memorandum of understanding with the Serbian government to acquire the Zastava business