Yugo Factory Closed Down

The World in Cars: Volvo, Yugo and Schumacher | The CarGurus Blog

I’m consistently struck by how globally oriented the auto industry has become. Reading the news this morning was a further education in that trend, with stories about: Ford and Geely coming to agreement on the sale of Volvo , Fiat taking over the old Yugo factory in Serbia, and of course Michael Schumacher coming out of retirement to race again (this one front-page in the New York Times online). These topics are just the tip of today’s iceberg, as every car site (ours included) increasingly covers the international side of car finance, production, marketing, politics, and consumption.

The Volvo sale, for instance, looks forward to a “definitive” purchase agreement by Geely of Ford stock “in the first quarter of 2010,” i.e., in the next three months! With all the troubles GM has had moving Opel and Saab, this deal represents for Ford an expedient strategy to slim down and refocus. On the other hand, this $2 billion purchase by Geely is China’s biggest commitment yet to going global with its auto industry.

Fiat not only swallowed Chrysler earlier this year, but has been moving aggressively into other foreign markets. In agreeing to take over the Zastava car factory, it commits €100 million ($142 million) and plans to make up to 200,000 cars per year. This is a down payment on a very big (€700 million) deal for Serbia and may finally put an end to all those tired Yugo jokes we have heard for years.

The auto business has been going global for a long time, of course, but it’s striking that many who comment on our stories now come from abroad. Also, the number and frequency of international stories seem to be zooming. Detroit’s bankruptcies and debacles have their own audiences, but they are increasingly marginal. At the same time, the ties that bind GM and Chrysler to the rest of the world—e.g., China—seem to be strengthening, even as their home markets dissolve.

Everyone knows this signifies a time of transition and enormous change for the auto world. But not everyone realizes that the U.S. is no longer at the heart of this world and in fact has not been its driving force for some years. As in so many things, we are lagging.

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