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Challenges and uncertainty surrounding Serbia’s automotive industry growth amid Fiat Panda delays

Despite the fanfare surrounding the electric Fiat Panda, production at the Kragujevac Stellantis factory has yet to begin. Initially scheduled for autumn 2024, the production launch has been delayed, with hopes that manufacturing may start by the end of January 2025. Although electric vehicles (EVs) remain less profitable in Europe, and the cost of the Panda remains uncertain, Serbia’s President is optimistic about the sector’s potential.

Last year, expectations were high when the electric Fiat Panda was ceremonially introduced in July. Yet, despite the buzz, production has not commenced as planned. With Europe’s automotive sector grappling with challenges, Serbia still anticipates growth.

President Aleksandar Vučić, speaking at the start of 2025, expressed his confidence in the automotive industry. “This year, I expect tremendous growth in the automotive industry, particularly due to the Fiat Panda, although we will face challenges with suppliers and auto part manufacturers, especially as production declines in Europe,” Vučić stated.

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However, despite this optimism, skepticism looms. Economist Uroš Delević remains wary of relying on a European industry that is facing a downturn. “We are too connected to these European giants, whose economies are in decline. The failure to diversify is evident, and this downturn will affect us,” he said.

The burden of driving growth in Serbia’s automotive sector rests heavily on the Stellantis plant in Kragujevac, where the electric Panda will be produced—eventually. Journalist Zoran Radovanović questions how well the vehicle will fare in European markets, citing varying levels of subsidies and fierce competition. While countries like France offer significant subsidies, Germany has reduced its incentives for electric vehicles. Additionally, the Citroën C3, produced on the same platform as the Fiat Panda, will compete in the same market.

Despite these concerns, President Vučić remains confident in the Panda’s success and dismisses competition. However, questions arise about potential job cuts, particularly as Europe’s automotive industry continues to face challenges.

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“Germany can’t afford to lay off 70,000 workers, yet here, we are left in the dark, mostly cooperating with the German industry,” Vučić said.

Economist Uroš Delević sees this as part of a broader phenomenon known as “jobless growth,” where productivity gains contribute to economic growth without a corresponding increase in employment. He notes that Germany’s factory closures and rising unemployment could have negative implications for Serbian workers in the automotive industry.

In an effort to support the sale of the electric Fiat Panda, the Serbian government is offering a €5,000 subsidy for buyers. However, the country may also have to address potential layoffs, with severance packages being prepared for affected employees.

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