The factory in the former Yugoslavia that once made the Yugo is to have a modern assembly line installed to build General Motors’ Opel Astra. GM has signed a deal with Serbian carmaker Zastava for the local production of Astras.
Zastava is Serbia’s only car plant and at the moment is running well below capacity. The state-owned factory was once a mainstay of the former Yugoslavia’s industry, but it was bombed during the 1999 Nato airstrikes on Serbian industrial sites and reconstruction has been slow.
The company has a long association with Fiat and has recently started assembling the Italian company’s Punto model for sale in Eastern Europe as the Zastava 10.
GM plans to turn out up to 10,000 Opel Astras annually by 2012. The first cars should roll off the assembly line late next year. Because they are being made in Serbia they can be sold for less there benefiting form tax breaks. Initially they would go on sale just in Serbia, but GM said it is exploring the possibility of expanding into the broader Balkan car market which is booming.
The Serbian government intends to privatise Zastava by the end of this year and believes the GM deal will make it more attractive to investors.