Test production of Fiat S.p.A.'s new models will begin in Serbia in the second half of 2011, according to a Serbian Economy Ministry official. This phase out the Punto, which is available in Serbia as well as neighboring markets. Fiat workers were so enraged with Fiat's plans to start production of two new car models at its unit.
Prime Minister Silvio Berlusconi would only say that he is hopeful that the decision will not have an impact on domestic manufacturing.
Nebojsa Ciric, Serbia's deputy minister in charge of economy and state asset sales, said that Serbia wouldn't interfere in any argument Fiat had in its home market. He said that the key was Fiat's intention to improve its initial investment in Serbia by 100 million euros ($130 million) to 800 million euros. He also said that the test series will start next year, most likely in the third quarter but no later than the fourth quarter.
Ciric added that by then, Fiat is expected to have upgraded its production facility in Kragujevac, central Serbia, to prepare for new cars that are slated to replace the Punto.
Ciric also said that currently, the production of the Punto is "just about enough to finance wages." In 2009, the plant built about 16,000 Punto subcompacts.
For this year, Fiat plans to produce about 20,000 units this year, about 25% of which will be exported. Last Tuesday, Belgrade newspaper Novosti reported that Fiat will continue producing the Punto until at least 2012, citing the local government in the town of Kragujevac.
To keep the Punto in Serbia and make a profit, the plant will need to produce 30,000 units a year. Local government officials have yet to release any comment.