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Buying cheap brands, getting cheap labor: Fiat to start talks with Zastava

3093 Views 7 Replies 7 Participants Last post by  Stéphane Dumas
As the major automakers of the world look to acquire or tie up with smaller manufacturers, I'm sure we'll see many such stories.

And with cheap "world cars" coming from automakers like Tata with their Nano, the Chinese - and now even GM and Toyota - the race is on as to who can get there quickest.

We already know that VW is going to/wants to tie up with Proton. GM was also interested but now seems focused on DRB-HICOM for a partner/acquisition target in SE Asia. Renault has bought a stake in AvtoVAZ.

Could this be next? Could Zastava be Fiat's "Cheap" brand?


Fiat interested in Serbia's Zastava, to hold talks soon - Serb minister UPDATE
April 22, 2008: 12:08 PM EST

MILAN, Apr. 22, 2008 (Thomson Financial delivered by Newstex) -- Fiat SpA is interested in acquiring Serbia's only auto manufacturer Zastava, said outgoing economy minister Mladjan Dinkic, adding that Fiat representatives are due in Belgrade this week.

In a Radiocor report from Belgrade, Dinkic said that based on the results of talks between Fiat and Zastava, the government will decide by the end of the month whether to hold an auction for Zastava.

The news agency said the Serb government had been due to auction Zastava this month but the operation was suspended after the government fell in March and ahead of new elections in May.

Citing government sources, Radiocor said Fiat is ready to invest 300 million euros on the Serb production plants, a high price which could see the auction not taking place.

Fiat already has an agreement with Zastava to assemble Fiat's Punto model in Serbia and sell them in Serbia and neighbouring Balkan countries, as well as export them to Russia, it said.

In 2006, Zastava produced 15,000 Punto models, a long way from its production capacity of 60,000, it said.

Serb newspaper reports say Volkswagen AG is also interested in Zastava and a month ago was considering whether to make an offer, it said.

General Motors (NYSE:GM) Europe has denied an interest, it said.

At start of April, Dinkic said the government could find more than one buyer for Zastava as part of making the region a centre for auto production, it said.

SOURCE 2: Article

As an aside, it was rumored recently that Fiat was looking to resurrect Innocenti or Autobianchi as a possible "cheap" brand to sell a new "Uno" and companion vehicle. The idea being that setting up a cheap brand would help them grab marketshare while insulating the Fiat badge.

Perhaps instead of doing that Fiat is looking to just buy Zastava and do for them what Renault has done in Eastern Europe with Dacia? There is a historical link between Zastava and Fiat - so it may not seem entirely unplausible.
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Re: Chasing cheap brands, labor: Fiat to start talks with Zastava

True, but nobody laughs at the Skoda jokes anymore. Daewoo produced Daewoos!! - who's laughing now? VW (and GM) want to get their hands on Proton. There was a bidding battle for Lada which, now Renault/Nissan has the stake, propels them to number 3 in the world - I hope, when GM made their bid, they considered the increasing scarcity value of these brands in these markets.
All true, no doubt. Some of the former back-water brands are now hot commodities as the standard of living increases around the world.

Just as with Dacia and Daewoo, Zastava was a bit of a joke -- but could Fiat (or someone else for that matter?) take them over and produce a quality, no frills car for the masses?

Certainly possible.
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