The European Investment Bank (EIB) said that, in 2011, it will lend EUR500 million ($684 million) to a joint venture with Fiat S.p.A. in the central town of Kragujevac, Serbia.
The EIB said the loan will help modernize and expand production capacity of the Fiat Automobili Srbija (FAS) facility, which currently makes the Fiat Punto Classic model, and aid investment in civil works, equipment and machinery and infrastructure.
EIB spokesman Marko Santarelli told Reuters that the timing of the signature will depend on the Fiat Group’s investment needs.
He added that it is likely that more than one finance contract will be signed, as such investment needs some time to be implemented. FAS has a long-term goal of producing 200,000 cars annually and generating about EUR2 billion.
Fiat has a 67 percent stake in FAS, which has absorbed Serbia's former sole car maker Zastava, while the government in Belgrade has the remaining 33 percent.
The Punto Classic model produced in Kragujevac is sold in Serbia and nearby markets. Fiat has plans to discontinue its production in Serbia.
In July 2010, a Serbian Economy Ministry official said that Fiat planned to start test production of two new small minivan models in Serbia in the second half of 2011. Code-named L0, the two small minivans will replace the Fiat Idea and Multipla. [via autonews - sub. required]