Boston, MA -- (SBWIRE) -- 11/11/2013 -- Although the domestic autos market in Serbia is far from developed, we believe that the Serbian autos production segment is set to establish its reputation as a highly competitive manufacturing base in the Eastern European region. Its proximity to high potential markets such as Russia, improving export ties with the EU and the hefty investments from Fiat will be key factors helping the production segment recover to pre-1999 levels.

Even by our modest forecast of 1.4% year-on-year (y-o-y) average annual growth between 2013 and 2017, we expect autos production to reach over 28,000 units by the end of our forecast - more than double the levels seen back in 1999. 2013 is poised to be a crucial year for the Serbian autos exports segment as well. With Fiat beginning exports of its Serbian-made cars to the US market from June 2013, Serbian total exports are expected to expand by an impressive 25% y-o-y, to EUR11bn in 2013. Car exports alone will stand between EUR1.5bn and EUR2bn.

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It is therefore not surprising that international suppliers and carmakers are rushing to establish their presence in the still immature market. As recently as August 2013, Huanghai Auto, the bus unit of Chinese vehicle and component manufacturer SG Automotive Group, expressed interest in acquiring the truck and special purpose vehicle factories of Zastava. Huanghai Auto is open to a cooperation deal with Zastava at the outset, following which it is keen on participating in the privatisation of the Serbian company's Kamioni and Specijalna Vozila units.

Meanwhile, in June 2013, French tyre manufacturer Michelin revealed plans to build another facility in the Serbian town of Pirot for EUR170mn (US$227.50mn). The facility will manufacture pneumatic tyres, which will be exported to the European, African and Asian markets. The facility will boost Michelin's annual production in the country from the current 8mn tyres, to 12mn tyres. With similar intentions, USbased car parts manufacturer Cooper Standard has purchased land in Sremska Mitrovica to construct a production facility by end-2013. Sealing systems and car parts from plastic and rubber will be manufactured at the facility, scheduled to be launched in January 2014. Additionally, Johnson Electric will build a factory for electric motors in the Serbian city of Nis as part of a memorandum of understanding signed between Serbia's Minister of Finance and Economy Mladjan Dinkic and Johnson Electric Director for Europe Laurent Cardon. Johnson Electric will invest EUR15mn (US$19.51mn) during the first phase of the project.

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