Continental and the Serbian Economy Ministry have inked an MoU to start a EUR17m (US$18.8m) plant in Subotica employing 500 staff.
The signing of the memorandum was attended by Prime Minister Aleksandar Vucic and head of market at Continental Markus Murk.
Serbia Minister of Economy, Zeljko Sertic said the signing was an indicator of support to reforms undertaken by the government and to the efforts of the local authorities in Subotica.
Sertic also noted Continental had been doing business in Subotica, since 2011 when it employed 650 workers with an investment of EUR11m.
An agreement on investment will be signed within the next 30 days, and the factory should be opened in the second half of next year.
The state will assist the investment with EUR3m, and the city of Subotica will provide 2.5 hectares for the construction of the factory.