Fiat and the Serbian Ministry of Economy and Regional Development inked a deal earlier this week that will see the Italian automaker take over the former Zastava plant in Kragujevac, Serbia. Zastava began producing vehicles for Fiat in 1955 and is most famous for producing the Yugo.
Fiat will use the plant as its main assembly hub for central and eastern Europe. The plant will produce an all-new model — dubbed the Topolino — which will ride on the same platform as the Fiat 500 and Panda. The Topolino — a throwback to the Topolino small car first introduced in 1936 (pictured) — will be a two-seater that will slot below the 500 and Panda and will measure about 18 inches longer than the Smart ForTwo.
According to Automotive News, Fiat will invest a hefty 700 million euros in the old Zastava plant to bring it up to modern standards. The Serbian government will kick in another 200 million through tax breaks and incentives.
The Kragujevac plant should be producing 200,000 Fiats annually by the end of next year, with that number ramping up to 300,000 by 2010 when the new Topolino comes online. Fiat plans to build an up-scale version of the Topolino for the Lancia brand at the Serbian plant, too.
