Zastava likely to enter Russian market

Zastava likely to enter Russian market

Fiat’s management recently approved Zastava’s request to sell the Zastava 10 model to Russian car dealers while other possible regional countries will be discussed between the Italian management and Zastava in late August.

According an earlier agreement, Zastava 10 will be sold in Serbia and all other southeast European countries.

“Soon we will begin an analysis of the Russian market, because we do not wish to guess how many cars we can sell there. However, regardless of our capacities, it is obvious that a market as large as Russia’s can offer a large amount of opportunities,” Zastava Cars CEO Zoran Bogdanović told the daily Danas.

Bogdanović also announced that, although nothing has been finalized yet, Zastava will probably appear on the Ukrainian market as well.

Zastava recently signed an agreement with General Motors that is similar to its agreement with Fiat .

The contract on business and technical cooperation says that the Kragujevac plant will start assembling and production of Astra Classics in the third quarter next year, while in 2009, production of a brand new Opel model will follow.

Opel is a renowned German manufacturer, part of the GM group, headquartered in Detroit, U.S.

The contract further stipulates that the cars assembled in Kragujevac will be sold under Opel’s name, through GM’s authorized dealership and service network, numbering 12 companies in Serbia.

Unlike the agreement signed with GM, Zastava’s contract with Fiat gives the company a license to produce the Punto model, under the commercial name of Zastava 10.

At the same time, 7,200 vehicles manufactured in Italy will be imported relieved of customs duty. The Fiat deal envisages localization of production—production of some parts in domestic or regional factories.

The Serbia-made parts must pass strict quality control, conducted by Italian controllers.

Neither of the contracts provides for strategic partnership with the carmakers, nor their participation in Zastava’s ownership structure.

Fiat has been quiet on the issue of Zastava’s privatization and possible participation in the privatization tender announced for December, while GM’s Central and Eastern Europe Sales Director Duncan Aldred said recently it is "still too early to discuss the privatization."