Fiat Investing $1.3 Billion in Serbia

Just the Facts:

• Fiat will use a Serbian plant instead of a Turin plant for some upcoming models.
• The move is the result of a conflict with trade unions in Italy.
• Fiat is expected to invest more than $1.3 billion in the Serbian plant.

TURIN, Italy — Fiat will launch production of the replacements for its Idea and Multipla minivans in its Serbian plant in Kragujevac, instead of the earlier announced Turin Mirafiori plant, due to a conflict with trade unions at home, according to Italian media reports.

Fiat is expected to invest more than $1.3 billion in the Serbian plant, with nearly $466 million provided by Fiat itself, $533 million from the European Investment Bank and the remaining $333 million from the Belgrade government.

According to Fiat, by the end of 2011, the Kragujevac plant will start production of two new minivans under the L0 code name, which will replace the Multipla, Idea and Musa models, which are currently produced at Fiat's massive Mirafiori plant in Turin.

The new models will be built on the Punto Evo platform, with different engines and five-or seven-seat versions.

The first Serbian Idea and Musa are expected to go on sale in February 2012. The annual output will reach 160,000-200,000 cars.

The decision to stop the assembly at Mirafiori will probably require Fiat to move the production of its other models, which were originally planned for production in Turin. Among these are the Alfa Romeo Giulia midsize sedan, a successor to the Chrysler Sebring, and new Dodge and Chrysler compact sedans.

According to earlier reports, there was also a possibility of launching the production of the Topolino model at Kragujevac.

Inside Line says: Labor union issues in Italy are nothing surprising, but Fiat's reaction here might be. — Evgeniy Vorotnikov, Correspondent