Eurasian Union remains unconquered market for FCA Serbia

Since the beginning of the year, Fiat Chrysler Automobili Serbia (FCA) is working non-stop which shows that the production of Fiat 500L is now stable and that the factory has been producing up to 450 vehicles a day.

The people of Kragujevac can vouch for this because they see cargo trains loaded with the cars from FCA Serbia leaving the town towards Western Serbia and further on towards the Port of Bar in Montenegro, embarking towards Italian ports from where they are then transported to European and North American markets. However, the Russian market and other markets of the Eurasian Economic Union (comprised of Belarus, Kazakhstan, Armenia and Kyrgyzstan) are still not the end destination for FCA’s cars. Judging by the promises given by the Russian officials, Fiat 500L was supposed to be granted a privileged status on the said markets, i.e. the cars would be imported duty free.

Fiat 500L did not arrive to the Russian and other Eurasian markets because the Russian President, Vladimir Putin failed to keep two promises with the first being that he would allow the first contingent of between 5,000 and 10,000 Fiat’s vehicle to be imported duty free. It seems that the reason why this hasn’t materialized as yet is the deadlock in talks about extending the Free Trade Agreement with Russia and other countries in the Eurasian Economic Union (EEU) which, in terms of automobile industry, would imply the mutual quotas, i.e. Russia exporting the same number of its cars (probably Lada) to Serbia.

Although, the Serbian government had officially announced that the talks on extending the Free Trade Agreement with Russia would begin on 30th September and end mid-December 2016, there is still not information from official Belgrade or Moscow whether this has happened.

So, all the public can do is to speculate why did the talks stop. Maybe the reason is the mutual quotas because if Ladas were to be exported to Serbia, some deem this is a detrimental arrangement considering the relatively small size of the Serbian car market which would be swamped with too many cars if Lada were to be exported to Serbia. Some say that the Russian company, AvtoVAZ, which majority owner is Renault-Nissan, could object to this deal, i.e. to the fact that very affordable Ladas would have a privileged status on the Serbian market.

(Danas, 16.02.2017)

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