First East European Cars Set Off for U.S.A.
Jul. 24, 1985
KRAGUJEVAC, Yugoslavia (AP) _ An initial shipment of Yugo cars, the first East European cars to be marketed in the United States, and one of the cheapest, left this Balkan town in a blaze of publicity and cheers from American well-wishers.
Local workers, U.S. Ambassador John Scanlan and a group of American car dealers sent the first shipment of 220 subcompacts on its way after taking a tour of the factory where the cars were made under this country's biggest and most promising export deal ever.
''I'm very impressed. This must sell,'' said Robert Valenti, a car dealer from Mystic, Conn. ''What we have here is another VW beetle,'' he said, alluding to the success of the German Volkswagen on the U.S. market two decades ago.
The first batch of Yugo GVs (for Great Volume) left the Crvena Zastava (Red Flag) works Tuesday en route to Baltimore, the initial destination.
The deal for export of the two-door, front-wheel drive hatchback was concluded earlier this year between newly formed Yugo America Inc. of Montvale, N.J., and the Yugoslav car manufacturer, for delivery of 40,000 cars in 1986 and leading to a total of 360,000 cars by the end of the four-year period in 1989.
The exuberant ceremony included a tour of the plant by the American executives, diplomats and dealers. The huge, 11 million square foot factory was bedecked with Yugoslav and U.S. flags, red-bannered slogans and huge portraits of late Yugoslav President and Communist Party leader Josip Broz Tito.
''I am very impressed by all this, but also suprised at the number of workers and lack of robots on the assembly line,'' said Roland Willis of Burlington, N.J., a dealer who has been in the car business for 31 years.
The base price is $3,990.
The company plans to work up to a network of 227 dealers in the next three years.
As the Americans passed through the cavernous factory halls they stopped to cheer and applaud the assembly workers. The workers, taking a short break beneath their huge American-made presses, stared with keen-eyed interest at the visitors.
Radovanovic Julijana, an assembly line worker, said ''quality control has improved by 100 percent, but only on the Yugos produced for America.
''On the other lines everything is pretty much the same,'' he said.
Nebojsa Mitrovic, a welder, said that only the best workers had been assigned to the line producing Yugo GVs for Americans.
The subcompact has been in production for several years in, but has never been noted for its quality. American and Yugoslav experts claim, however, that about 500 modifications were made to the export version.
''This is a completely new car,'' said Toma Savic, deputy director of Zastava.
''Yugoslavia should be proud of this small car. Everybody will be talking about it in the United States,'' said Malcolm Bricklin, chairman of Yugo America and the man who initiated the venture.
Enterpreneur Briklin's venture has been described as a high risk gamble by industry experts in the United States.
Bricklin claims American buyers will overlook the Yugo's possible drawbacks when they spot its bargain price. If the Yugo should prove a success, it could put Bricklin back into the limelight which he enjoyed in the 1970s, when he marketed a flashy gull-winged sports car that bore his name.
The venture was unsuccesful, despite heavy promotion.
Under prodding by their American partners, the Zastava works began an all- out quality improvement campaign. The production workers assigned to the Yugo GV line are all handpicked non-smokers, dressed in new overalls with fabric- covered buttons to avoid scratching the cars.
Several crucial components, such as carburetors and shock absorbers, are imported.
Yugoslavia enjoys most-favored-nation tariff treatment under U.S. law. As a less-developed country it benefits from duty-free entry for roughly 40 percent of its exports to the United States, which totalled $432 million in 1984.
Japanese car manufacturers have been expressing unease about Third World competitors such as Yugoslavia, as they could account for a large slice of the emerging subcompact market in the United States, according to Yugo America officials.
The low price of the car is primarily due to an expensive dollar and to the rapid devaluation of the Yugoslav currency in the past several years. The average monthly salary of Zastava workers is $100, slightly above the national average. If this venture should succeed, Yugoslavia will earn badly needed foreign currency to repay its $19 billion foreign debt.