Fiat, Serbia ink deal to build cheaper version of the 500L for domestic market

Article by Christian A., on April 1, 2013

A subsidy deal was made between Serbia and Fiat to build a more affordable version of the 500L minicar for the domestic market, according to the Blic newspaper. The report, which cited Finance Minister Mladjan Dinkic, said that under the agreement, the Serbian unit of Fiat, which is based in the central city of Kragujevac, will build a version of 500L for 10,900 euros ($14,200) or about 3,000 euros lower than its regular price.

This plant, which is a 1 billion euro ($1.3 billion) joint venture that’s 67% owned by Fiat and 33% by Serbia, will utilize a one-time government subsidy from this year’s budget for 1,400 new hires this year and next to make the cheaper model. The Fiat 500L, a stretched version of the Fiat 500 minicar, is already built in Serbia to be exported.

Dinkic told Blic that Fiat has made a promise to create 1,400 new jobs. For this, the company will provide subsidies of 10,000 euros for every new worker, It has also agreed that this money will be used to build a variant of the 500L for the Serbian domestic market. The Finance Ministry has yet to comment on this report. The Serbian government subsidizes direct foreign investments to aid it in emerging from recession and to fight unemployment, which presently stands at around 25%.

Dinkic said last week that subsidies will be disbursed on the condition that Fiat secures local banks and leasing companies to provide five-year deals at 3% a year in euros, which is the currency preferred in the European Union candidate country.

Serbia predicts that there’s a 25% increase in the value of its exports this year to about 11 billion euros ($14 billion) with the automotive industry making up around 20% of the total, which include output from the Fiat plant. Antonio Ferara, the CEO of Serbia's Fiat plant, said earlier this month that the company intends to produce between 110,000 and 180,000 500Ls for the European and the U.S. markets in 2013.

Topics: fiat, fiat 500l, europe

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