By on August 31, 2012

Turns out that Fiat wasn’t affected too bad by Serbia’s sudden cash crunch. As reported yesterday, the country is having a hard time coming up €90 million it owes Fiat towards a jointly owned car plant in Kragujevac. Fiat has a richer sugar daddy, and he lives in Brussels.  The European Investment Bank sees no reason not to continue disbursing its 500 million euro ($625 million) loan to Fiat, Reuters says. The loan is earmarked for the same plant.

The subsidized loan was granted by the European Union’s finance arm in May 2011, and  “at the moment we are not aware of any impact on the loan,” a spokesman for the EIB told Reuters  today.

This is how the deal works: The EU pays €500 million, Fiat pays €410 million, Serbia pays €90 million. Except that Serbia will pay a bit later.

The Kragujevac plant opened on April 14 with a capacity of up to 200,000 cars per year.  It builds Fiat’s new 500L, as in large.  The car will be launched next month.

Does Europe need new 200,000 car factories? Guess with a big loan from Brussels, that overcapacity problem suddenly doesn’t look that big anymore.

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4 Comments on “Marchionne’s Money: Kragujevac Can’t Pay, Brussels Can...”

  • avatar

    Europe (or FIAT) may not need the factory — but the loan was granted more than a year ago, and the factory is already operating, so I don’t see why EIB would back out now.

  • avatar
    el scotto

    Buy a Fiat in Serbia? I’ll go to Kosovo and get a “used” Mercedes.

    • 0 avatar

      A used Mercedes acquired in Kosovo will be be environmentally friendly as well. Those clever Albanian fellows know that when a car is made as light as possible, it gets better fuel mileage, so they remove all unnecessary weight……such as lock cylinders, VIN number plates, Lo-Jack units and the like.

  • avatar

    Europeans have no imagination. Make it 500 billion – now we are talking! We can send them Mr.WhoWillBeKickedOutSoonHopefully – our lead expert in spending taxpayers money to rescue – we are still strong enough to survive without him for a while. We always ready for sacrifice to help our friends!

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