Automotive Cluster SerbiaAlso production of trucks (Zastava Trucks, FAP Priboj), busses (Ikarbus, Neobus), tractores (IMT, IMR) and special vehicles (Zastava Specijalni Automobili)

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Automotive industry in Serbia within the international market

Milano, May 23rd 2011

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Basic Facts:Basic Facts:

� Tradition: Automotive industry in Serba since 1939(Cars, trucks, busses, special vehicles)

� After World War II: Zastava motor vehicleproduction in Kragujevac under FIAT license

� High point 1989: 250.000 cars produced and exportedto 70 countries (including UK, USA)

� During the 90‘s: Annual production falldown (20.000 cars)

� Since 2000: Reemerging of Serbian automotive industrydue to privatization process, FDI inflow and governmentsupport

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FIAT FIAT -- Zastava: Strategic PartnershipZastava: Strategic Partnership

� SKD Assembling of Fiat Punto 2/Zastava 10 since

June 2007 (10.000 cars/year)

� MoU between Zastava and FIAT signed in April 2008

• Joint Venture: 67% FIAT (EUR 700 mn investment)

33% Serbian Government(infrastructure, incentives)

• Production of two new modells in Kragujevac – A and B segment

• Planned yearly output will reach 300.000 cars in 2012

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FIAT FIAT -- Zastava: Strategic PartnershipZastava: Strategic Partnership

• Total investment at around 1 billion EUR

• Additional EUR 500mn expected through supplier networkdevelopment

• The new factory should export 1.5 billion EUR/year worth of cars

• Up to 85% of new model components will be produced in Serbia

• 2,400 jobs will be created by Fiat, while 10,000 more by suppliersand sub-suppliers

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Total sector turnover and exports (mill. EUR)Total sector turnover and exports (mill. EUR)

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20052005 20062006 20072007 20082008 20092009Source: SIEPA

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Investments:Investments:

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WorkforceWorkforce

Number of employees declining in domestic companies (due to privatization) but a sharp increase in foreign owned companies (new investors coming, growing of existing operations, etc…)

Source: SIEPA

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Company structureCompany structure

Company structure:

� 48% large companies

� 38% Medium companies

� 14% Small companies

Source: SIEPA

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Engine components: mostly flywheels, valves, camshafts, connecting rods, crankshafts

(significant inflow of FDI)

Plastic and rubber parts: various exterior and interior parts

(mostly produced by domestic companies)

Electrical and electronic: mostly wire harness but also batteries and starter motors

(significant inflow of FDI)

Main product groupsMain product groups

Source: SIEPA

Competitive Advantages of Serbian SuppliersCompetitive Advantages of Serbian Suppliers

Geographical location

Know-How

Cost efficiency

Quality

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KnowKnow--How:How:

� Production of automobiles in Serbia since 1939 (1989: 230.000 cars)

� Also production of trucks (Zastava Trucks, FAP Priboj), busses (Ikarbus, Neobus), tractores (IMT, IMR) and special vehicles (ZastavaSpecijalni Automobili)

� Decades of cooperations with prestigious companies on the basis oflicences and Joint Ventures (GM-Opel, Fiat, Mercedes, Boeing, Iveco)

� Chairs for motor vehicles at technical faculties in Belgrade, Niš,Kragujevac and Novi Sad and institutes for motor vehicles inBelgrade and Kragujevac

� Homologation inspections according to ECE standards

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Cost efficiency:Cost efficiency:

� Various financial and tax incentives! Investment grants, tax holidays

� Low labour costs! Average EUR 469 total monthly for blue collar staff

� Favourable tax regime! Lowest corporate profit tax in the region: 10%

� Customs free access to 1bn people European Union, Russian markets due to special free trade Federation, Turkey, CEFTA agreements! countries, EFTA countries,

Belarus, Kazakhstan

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Geographical Location:Geographical Location:� Crossroads of two Pan-European

Corridors VII (Danube) and X (Salzburg/Budapest via Belgrade toThessaloniki/Istanbul)

� Vicinity of other European capitals (1-2 hours by plane)

� Vicinity of regional capitals (3-5 hours by car)

� Vicinity to new production facilities ofinternational automotive industry in CEE countries (Czech Rep., Slovakia, Hungary, Romania, Russia)

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Quality Management Systems:Quality Management Systems:

� International required QM standard ISO 9001 mainly implemented

� Reasons for low level of ISO 16949 implementation:

- Focus on spare parts markets and TIER 2 or 3 production- Implementation of ISO TS in new established Greenfield companies underway

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AC Serbia AC Serbia -- Automotive Cluster SerbiaAutomotive Cluster Serbia� AC Serbia network was established in November 2005 and actually

counts 40 members (35 companies and 5 R&D institutions) that areachieving a turnover of ca. 250 mill. EUR with ca.10.000 employees.

Main goals:

� Revived and extended active connections between the Serbian andEuropean automotive industry

� Support in strengthening the competitiveness of its members

� Achieving a profitable positioning within the supply chain of international car producers

� Effecting the enhancement of the economic situation within thewhole automotive supplier sector in Serbia

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AC Serbia AC Serbia –– Activity fields:Activity fields:

� Qualifikation:Qualifikation: Education, seminars, trainings in view of technical, organisational and management skills

� Information und Communication: Information und Communication: Information exchange betweennetwork management and members, partner networks, customers and state organisations

� Marketing: Marketing: Advertising and image building at trade fairs, conferences,B2B meetings and through presentation to potential customers

� Cooperation: Cooperation: Defining and seeking cooperation projects within the network or with national and international companies, projectmanagement of cooperation projects, cooperation with other networks

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Thank You for Your Attention! Thank You for Your Attention!

Dejan VratonjicProject Manager AC SerbiaE-mail: [email protected]

Automotive Cluster Serbia Dečanska 8/III11000 Belgrade, SerbiaE-mail: [email protected]

Web: www.acserbia.org.rs