Serbia and Fiat have struck a deal to produce a cheaper version of the 500L compact MPV for the domestic market. According to the agreement, Fiat Serbia will receive state subsidies to produce a version of the 500L for €10,900 ($14,200), about €3,000 less than its regular price, said the country’s finance minister Mladjan Dinkic.
“Fiat has pledged to hire 1,400 new workers… for that they will get subsidies of €10,000 per every new worker and we have agreed that the company will use that money to produce a version of 500L for the domestic market,” Dinkic was quoted as saying by the Blic newspaper.
Fiat’s Kragujevac plant is a €1 billion ($1.3 billion) joint venture 67 percent owned by Fiat and 33 percent by Serbia. The factory already builds the 500L, with 30,000 units made last year since production started in July.
Serbia’s government subsidizes direct foreign investments to help the economy emerge from recession and to counter unemployment, currently estimated at about 25 percent. Fiat will get the subsidies on condition that car financing is done through local banks and leasing companies, which would have to offer five-year deals at 3 percent a year in euros.
Fiat’s plant in Serbia is expected to make between 110,000 and 180,000 500Ls this year for European markets and the United States.
By Dan Mihalascu
Story References: Reuters
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