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The Government of the Republic of Serbia

In the service of citizens

Production of "Zastava 10" in Kragujevac begins in June

Belgrade, 7 March 2007

Director of "Zastava Auto" Zoran Bogdanovic said today that this company will start the production of a trial line of "Zastava 10" consisting of 196 cars in Kragujevac in early June, under the licence of Italian FIAT.

Author: Beta

Speaking at a promotion of this car held in Belgrade, Bogdanovic said that "Zastava Auto” prepared the infrastructure and with the assistance of Italian experts completed the installation of the equipment in the production plants of "Zastava 10". The value of the entire equipment delivered by the Italian company "Comau" exceeds €4 million.

He voiced hope that the quality of cars produced in Kragujevac will be better than those produced in Italy because the equipment installed here is more modern than at FIAT's production plants.

According to him, for the first production line, the price of "Zastava 10" will remain the same because all parts are imported, while the price should go down when domestic producers start supplying the parts.

Bogdanovic said that last year, 3,100 "Zastava 10" cars were sold in Serbia, 202 in January this year, and 157 in February. Since the start of the year, 100 cars have been exported to Croatia and 10 to Bosnia and Herzegovina.

Serbian Assistant Minister of Economy Milan Josipovic said that the manufacture of "Zastava 10" will improve the company's business performance and make it locate a strategic partner more easily.

According to estimates of the Ministry of Economy, the number of employees in "Zastava Automobili" should be reduced by 1,000 workers, down from the current 4,000.

He explained that the number of employees has to be reduced for the sake of strategic consolidation of the Serbian car industry, positive business operation and the company's greater attractiveness for potential partners.

According to him, the government will support the project "Zastava 10" and secure funds in line with the social programme, as it has done in other companies too. One or two such projects are still necessary so that the company may perform without losses.

The domestic company for financial leasing "Lipaks" will offer favourable terms for the purchase of "Zastava 10" cars. Director of the company Milan Zezelj said that the terms for the leasing of "Zastava 10" are a seven year repayment period with equal monthly installments, with a nominal interest rate of 5% a year and a down payment of 20%.

Zezelj said that the full price of the car with a euro 3 engine is €7,350 with VAT included, while the price of the version with a euro 4 engine is €7,590 with taxes included.