[Bravada]

Fiat takes Zastava, GM empty-handed

According to various news reports, the Fiat Group has reached an agreement with the Serbian government to take over Serbia's only automaker, Zastava, through a 70/30 JV (70% going to Fiat). This comes after four months of negotiations with potential partners following the official announcement that Zastava is for sale. Among the possible buyers only two were seriously considered to be interested, namely Fiat and GM, which both have licensing/assembly agreements with Zastava.

For more, got to Italiaspeed

An earlier report stated that the plans for Zastava include introducing a new model of a very small (and presumably, very "affordable") vehicle based on the successful Fiat Panda mini car (think smaller than Aveo). The vehicle was also announced before the Zastava deal, so it seems now that everything is said and done, it found a home.

Does that mean Fiat will try to turn Zastava into another Dacia? Will they be willing to keep the Zastava/Yugo name, or are the rumours of reviving the old Innocenti brand for that purpose substantiated? On the one hand, the demise of Innocenti actually gave birth to Yugo - the old Innocenti 120 body was sent to Serbia to form the Koral, or Yugo 45/55, together with Fiat 127's and 128's underpinnings. On the other - nobody really remembers Innocenti, and it has a rather different background...

Related GMI stories:
Innocenti or Autobianchi revival? 2 new, small Fiats coming for developing markets
Buying cheap brands, getting cheap labor: Fiat to start talks with Zastava
Zastava (Yugo) for Sale
GM & Zastava Automobili start joint venture program in Eastern Europe
GM in Talks with Serb Zastava Over Opel Deal

****

Now, what does it mean to GM?

First off, let's look at the Kragujevac's Zastava plant production programme:

1. Yes, the world famous Yugo Koral is still alive, now as Zastava Koral In, a bit tarted-up but still the same car Mona drowned in:

2. A larger Zastava Florida In (also originally Yugo Florida), a once-modern extension of the old Yugo range:

3. Zastava 10, a recent development, and actually a hand-me-down (older Fiat Punto) from Fiat who revived good old tradition of licensing older models to the Serbs. Recently all the rage in Serbia, apparently ubiquitous in Belgrade, even as police car, as seen on TV in various reports on post-Kosovo riots.

4. Zastava (freakin') Skala 101, another one licensed from Fiat BUT back in 1971 - it's Serbian for Fiat 128, COTY 1970!!!

5. Lo and behold - Opel Astra B (the same one that's currently built in Poland, i.e. the previous-gen Astra known to Europeans and Australians as the Classic) - an agreement with GM was announced in 2007, I am not sure if the assembly has yet started or whether they're waiting for the Gliwice plant to hand down production lines once production winds down here.

So, the talk of town was that both GM and Fiat were in talks with Zastava to extend their cooperation beyond assembly/licensing and to actually take over the entire enterprise. Even though both GM and Fiat operate plants in Eastern Europe, they are both in Poland and churning out perfectly "normal" cars, so even despite some cost and quality advantage, they aren't quite what Dacia is.


Oh, in case you've been under a rock - Dacia is a Romanian automaker, which, like perhaps all Eastern Block makers but Skoda, relied on a partnership with a Western automaker, Renault. And, after a long hiatus, it was finally taken over by Renault recently. Renault gave Dacia a lot of attention, development monies and the Renault Clio platform and received in return the Logan:

It is a car designed with so much cost-cutting in mind GM's bean-counters could only watch with gritted teeth. It is reasonably up-to-date when it comes to basic technology, has actual room for a 2+2 family (unlike minicars often peddled to developing markets as "cheap family transport"), and, as mentioned, is targeted at developing markets where people want a decent car at a very low price. It proved a runaway success around the globe and started the recent buzz about low-cost models, re-ignited by the arrival of ultra-cheap Tata Nano this year.


SO, Fiat and Opel were competing for both great access to the Serbian/former Yugoslavian market (despite severly maligned by years of warring, it is still a condierable customer base, also given that Yugoslavia was by far the wealthiest [per capita] of Eastern European countries), as well as a potential chance to have their own Dacia. And Opel lost...

 

[t-rex]

I hope Fiat doesn't bring back Innocenti.

To me, Innocenti will always be equated with British Leyland, not Fiat. Innocenti did a bangup job rejigging the Austin 1100 back in the 1960s, giving it a snazzy dash with big italian dials, upgrading the interior, and fixing that bus-like steering wheel angle.

And I have a strange fondness for the Bertone-styled Mini hatchbacks.

 

[throwback]

Fiat probably offered more money. Something GM does not have an abundance of.

 

[Smaart Aas Saabr]

I hope Fiat doesn't bring back Innocenti.

To me, Innocenti will always be equated with British Leyland, not Fiat. Innocenti did a bangup job rejigging the Austin 1100 back in the 1960s, giving it a snazzy dash with big italian dials, upgrading the interior, and fixing that bus-like steering wheel angle.

And I have a strange fondness for the Bertone-styled Mini hatchbacks.

I like the Bertone-minis too. With Daihatsu engine who could go wrong? Yet I haven't seen one on a Montreal road, like ever, despite that they were sold here in some number circa 1984-88

 

[Member17739]

Fiat probably offered more money. Something GM does not have an abundance of.

I doubt we are talking about big money here. Fiat has a long history of cooperation with Zastava(Flag) which probably made them top choice for the Serbs.

 

[Bravada]

I guess Fiat just laid out a development plan for Zastava - I don't think GM did have one off the cuff. I guess it's a good partnership.

As concerns Fiat's cheap brand, I would love to see Innocenti and Autobianchi back and most of the storied nameplates (even if they were less than "storied"), BUT who in the world remembers Innocenti, how is it relevant as a brand for cheap cars (apart from Italy, where it was relegated to importing Yugos and Brazilian Mille/Elbas after Bertone Mini operations were shut down), and why would it resonate in the global markets?

I believe for a brand to rival Dacia (which goes by as "Renault Logan" in many markets anyway) or Tata, you need a simple brand. I'd take Yugo over Zastava, because:

1. It is simple and easy to pronounce in most langauges
2. It reads "you go" - hardly a better pun for markets like India
3. It can probably be spelt with two Chinese characters with high accuracy
4. Only in the USA is Yugo really remembered as a brand, plus vaguely in Western Europe, neither of which are target markets for the "budget" brand
5. It already has a simple, nice logo:

As you can see - just needs some touch-ups and ready to go

PS. I also like the model names Koral, Florida and Skala - simple and nice for inexpensive vehicles. Your thoughts?

 

[GM-Joe]

Nice and interesting read. Fiat probably fits closer to the needs of the Serbian people, so the country went with Fiat. If GM really wants to be there, they may have more success in creating their own vehicle for Serbia as well as an assembly plant, from scratch.

 

[SierraGS]

Fiat takes Zastava, GM empty-handed

According to various news reports, the Fiat Group has reached an agreement with the Serbian government to take over Serbia's only automaker, Zastava, through a 70/30 JV (70% going to Fiat). This comes after four months of negotiations with potential partners following the official announcement that Zastava is for sale. Among the possible buyers only two were seriously considered to be interested, namely Fiat and GM, which both have licensing/assembly agreements with Zastava.

For more, got to Italiaspeed

An earlier report stated that the plans for Zastava include introducing a new model of a very small (and presumably, very "affordable") vehicle based on the successful Fiat Panda mini car (think smaller than Aveo). The vehicle was also announced before the Zastava deal, so it seems now that everything is said and done, it found a home.

Does that mean Fiat will try to turn Zastava into another Dacia? Will they be willing to keep the Zastava/Yugo name, or are the rumours of reviving the old Innocenti brand for that purpose substantiated? On the one hand, the demise of Innocenti actually gave birth to Yugo - the old Innocenti 120 body was sent to Serbia to form the Koral, or Yugo 45/55, together with Fiat 127's and 128's underpinnings. On the other - nobody really remembers Innocenti, and it has a rather different background...
So, the talk of town was that both GM and Fiat were in talks with Zastava to extend their cooperation beyond assembly/licensing and to actually take over the entire enterprise. Even though both GM and Fiat operate plants in Eastern Europe, they are both in Poland and churning out perfectly "normal" cars, so even despite some cost and quality advantage, they aren't quite what Dacia is.

Oh, in case you've been under a rock - Dacia is a Romanian automaker, which, like perhaps all Eastern Block makers but Skoda, relied on a partnership with a Western automaker, Renault. And, after a long hiatus, it was finally taken over by Renault recently. Renault gave Dacia a lot of attention, development monies and the Renault Clio platform and received in return the Logan:

It is a car designed with so much cost-cutting in mind GM's bean-counters could only watch with gritted teeth. It is reasonably up-to-date when it comes to basic technology, has actual room for a 2+2 family (unlike minicars often peddled to developing markets as "cheap family transport"), and, as mentioned, is targeted at developing markets where people want a decent car at a very low price. It proved a runaway success around the globe and started the recent buzz about low-cost models, re-ignited by the arrival of ultra-cheap Tata Nano this year.

SO, Fiat and Opel were competing for both great access to the Serbian/former Yugoslavian market (despite severly maligned by years of warring, it is still a condierable customer base, also given that Yugoslavia was by far the wealthiest [per capita] of Eastern European countries), as well as a potential chance to have their own Dacia. And Opel lost...

Can't help notice the Dacia pictured is attractive has Fog Lights, chrome grille surround and adjustable height shoulder belts - things that GM beancounters would ax in a second, on the other hand it does not have any bezel/trim under the side mirrors - they are just bolted on from behind the door with a minimum trim piece - maybe GM beancounters are looking in the wrong areas?

I have always contended that if you make a car look good and give it a few low cost features like the grille, fog lights and adjustable belts that together cost under $300 (mfg) but boost the "curb appeal" by nearly $1,000 that the car will be a success.

How to Dacias drive?

Are they noisy and slow or competent for the price (my guess is they perform fairly well).

 

[t-rex]

I believe for a brand to rival Dacia (which goes by as "Renault Logan" in many markets anyway) or Tata, you need a simple brand. I'd take Yugo over Zastava, because:

1. It is simple and easy to pronounce in most langauges
2. It reads "you go" - hardly a better pun for markets like India
3. It can probably be spelt with two Chinese characters with high accuracy
4. Only in the USA is Yugo really remembered as a brand, plus vaguely in Western Europe, neither of which are target markets for the "budget" brand
5. It already has a simple, nice logo:



As you can see - just needs some touch-ups and ready to go

PS. I also like the model names Koral, Florida and Skala - simple and nice for inexpensive vehicles. Your thoughts?

I agree completely. A "cheapie" brand is far more likely than not going to be marketed exclusively in developing markets like Eastern Europe, India, Latin America, etc., where the Yugo brand has virtually zero recognition. Since Fiat will never have a large operation in North America (though hopefully a future Alfa palette with some boutique Fiats thrown in would be nice), I believe "Yugo" would be a successful brand name for Fiat.

Koral and Skala are very good model names. "Yugo Skala" has the same sort of "classy-cheap" appeal that names like "Skoda Fabia" have.

 

[SierraGS]

I agree completely. A "cheapie" brand is far more likely than not going to be marketed exclusively in developing markets like Eastern Europe, India, Latin America, etc., where the Yugo brand has virtually zero recognition. Since Fiat will never have a large operation in North America (though hopefully a future Alfa palette with some boutique Fiats thrown in would be nice), I believe "Yugo" would be a successful brand name for Fiat.

Koral and Skala are very good model names. "Yugo Skala" has the same sort of "classy-cheap" appeal that names like "Skoda Fabia" have.

I agree on the Yugo name in non-U.S. markets, an easy to remember and say name goes a long way in brand building, even people in the U.S. remember the Yugo name - not in a good way, but the fact many still remember it says a lot.

 

[Bravada]

I wish this thread won't get closed for political reasons, so please discuss the issue somewhere else, SVP.

PS. Yugo has SOME recognition in Eastern Europe, we've had Yugo sold here, though without much success (like post-1989 Dacia before the Logan). I hope Sergio M. reads this thread though - I'd like a Yugo Florida

 

[Member17739]

I wish this thread won't get closed for political reasons, so please discuss the issue somewhere else, SVP.

PS. Yugo has SOME recognition in Eastern Europe, we've had Yugo sold here, though without much success (like post-1989 Dacia before the Logan). I hope Sergio M. reads this thread though - I'd like a Yugo Florida

Yugo Florida was a decent car when it was introduced ~20 years ago. They had big plans for that car but a year or two later the war started which pretty much destroyed Zastava's sales. IIRC, Zastave was making ~250K car a year in the late 80's.

 

[nadepalma]

Good write up Bravada.

 

[Bravada]

Thanks a lot, too bad it didn't get too much attention :/

 

[CaMIRO]

Good write-up.

Here's another analysis:
http://diferencijal.com/en/2008/05/06/analysis-what-does-the-zastava-fiat-agreement-mean/

Essentially, nothing is set in stone yet.

The agreements signed between Fiat and the Serbian government, and between Fiat and Kragujevac, are not contracts, and most likely do not obligate either party.

GM and Fiat have a rocky relationship, but if the Zastava/ Fiat deal does come to pass, consider this:

- Zastava has a 5-year deal to assemble Opels (contrary to popular belief, the Astra Classic II is not actually specified, by name, in the deal).

- Zastava has a brand new, 15 million euro production line that is probably the most flexible in the region.

- If the line can be adapted to the Astra Classic II, it could probably cope with the Grande Punto.

- The Grande Punto and the Opel Corsa share a platform...

etc. etc.


The Zastava topic is complex enough without throwing politics into the mix. Why get the thread locked over a controversial issue that virtually no one here is qualified to comment on?

The only place that politics in this discussion is: why now? Why is Fiat suddenly interested in a chunk of Zastava? Fiat and Zastava have been working together in one way or another for 55 years. And Serbia has had a customs-free export agreement with Russia (the world's 2nd fastest-growing auto market, and one of the key reasons for Fiat's potential involvement in Zastava) for some time.

Why all the ceremony over what amounts to an agreement to hold further discussions?

Serbian elections will be held May 11th. Suffice to say that Fiat's true intentions will likely be clearer once the pre-election pomp and posturing die down.

 

[SierraGS]

Thanks a lot, too bad it didn't get too much attention :/

It is a very good writeup, unfortunately the article had nothing to say about the Camaro or Malibu, then there would be 12 pages of posts.

This is too bad, this is something that can affect GM's position in Eastern Europe/Russia which are both fast growing car markets that GM has to be on top of NOW. GM is trying to position itself there which is good and hopefully will get some good partners for these markets as GM needs help with cash/facilities to strech thin resources.