Serbia's Zastava to fit
Yugo with Peugeot engines
Reuters / April 25, 2002
BELGRADE - Serbian carmaker Zastava, long in search of
a foreign partner, has signed a deal to fit engines of France's PSA Peugeot
Citroen into its vehicles, newspapers reported on Thursday.
General Manager Zoran Radojevic told Politika newspaper the deal could boost its
hopes to find a lasting strategic partner, having missed a tide of western
tie-ups due to the Balkan wars. Using foreign engines will also help it meet
emissions standards.
"We also had contacts with Toyota but chose the French because of a more
favorable price," Radojevic said, adding that volumes of the French-powered
models will depend on Zastava's ability to restore old markets and conquer new
ones.
The company has been hit hard by the loss of markets following the break-up of
the old Yugoslav federation in 1991 and NATO bombing in 1999.
Standard 1.1- to 1.6-litre Peugot-Citroen engines will be built into upgraded
models of Zastava's Yugo compact and Florida hatchback, Politika daily said.
Last July, the Serbian government, its sole shareholder, signed an agreement to
restructure Zastava cars, slashing about 8,000 jobs and leaving around 4,000
workers to produce an upgraded version of the Yugo.
Zastava confirmed the report. It said it produced 1,512 cars in the first three
months of this year against a target of 18,000 for the whole year. It made 8,068
cars in 2001.
