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March 3, 2010

GENEVA SHOW: Fiat refocuses new Serbia plant

Fiat has ditched plans to build a city car at its new plant in Serbia, preferring to focus on two bigger models instead, according to a media report.

Fiat has ditched plans to build a city car at its new plant in Serbia, preferring to focus on two bigger models instead, according to a media report.

Of the two new models to be made in Serbia, Fiat initially intended to make a tiny A-segment car and a slightly bigger B segment model but has recently changed plans, preferring to make one for the B and another for the C segment, two sources told Dow Jones at the Geneva show.

One source said Fiat made the change because it already makes an A segment car, the Panda, in Poland and would soon start making it in Italy at its plant near Naples.

“There’s no sense dedicating a third plant to it,” the person said.

After reaching an agreement with the Serbian government in December, Fiat is set so start manufacturing cars at the plant in the town of Kragujevac sometime in 2011. Under the terms of the agreement, it has come to own 67% of the joint venture that will run the former Zastava Automobili plant and the Serbian state the other 33%.

They are to invest a combined EUR700m in the next three years to equip and modernise the aging plant. The aim is to make 200,000 cars a year, with the option to raise production by an additional 100,000 at a later date. Most of the cars will be for export.

Fiat’s plant in Tichy, Poland, is shared with Ford and builds the Fiat 500 and Ford Ka using many common parts.

Fiat brand head Lorenzo Sistino declined to comment ahead of the presentation of the group’s latest business strategy next month.

Chief executive has spoken of the possibility of making a low-cost car, while at another time he talked about the idea of a car with “global applications.”

Fiat has been seen by analysts as being purposely vague because of the outcry it has faced in Italy over its plans to shut down a plant in Sicily, Dow Jones noted.

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