Introduction

Some readers will enjoy the look back and the glimpse of a potential future; others will no doubt throw epithets our way.

As always, we are open to comment: thebear@automobear.com !

March 29^th, 2004

Coulda' been a contender

The apparent failure of Yugo-ZMW - and the surrounding general apathy - hide an opportunity that we cannot resist fleshing out (clearing up a few myths in the process)

Zastava 750 (1954-1988) The smallest Zastava ever made, the 750 did for Yugoslavia what its cousin, the Fiat 500, did for Italy. Barely capable of 60mph, the robust little car was nevertheless perfect for commuting and was cheap enough to mobilize a population like few cars in history have. After production of the Fiat 600D - fitted with a 633cm3 engine - Zastava began producing the 750, similar to the 600D. When production of the Italian 600 completed in 1970, Zastava rolled out the 750M, a 600E fitted with a new 795cm3 engine with a thermostat and a closed cooling system. Next came the 750S, which boasted Fiat 126-based upgrades to the fascia (including a tachometer), and a new steering wheel. In 1980, the 850 was launched, with an 843cm3 engine. Both 750 and 850 continued through 1988 in L, LE, and SC versions. Finally, the 750/ 850 and 900 cars were sold to the Tofas factory in Turkey, which continued to produce these cars under license into the '90s. 750s could often be seen driving with the rear engine cover propped-open, a precaution against the overheating which could plague the little air-cooled unit. Yet the car's endearing ability to take a beating and come back for more kept it in production relatively unchanged for more than twenty-five years Zastava 1300 (1963-1982) The 1300 is considered by many in the former Yugoslavia to be the best vehicle Zastava ever built Zastava 101 (1971-2001) The 101 was based on the Fiat 128, and featured front-wheel-drive well before many contemporary vehicles from more established manufacturers. The five-door hatch style was Zastava's own design

Zavodi Crvena Zastava originated in Serbia in the 19th century as a maker of military equipment and farm implements, but didn't turn to car production until 1954. Zastava's cars (Fiat 500-based 750, top; the 1300, middle, and Fiat 128-based 101, bottom) were popular in Eastern Europe, considering that they were far ahead of Eastern Bloc cars like the East German two-stroke Trabant and Wartburg

The Yugo at its summer, New York launch in 1985. By the early eighties, Zastava was developing a Fiat 128-derived hatchback: what the U.S. now knows under the Zastava export name, "Yugo." In the Summer of 1985, Yugo announced its entry into the American market as "Yugo of America." At just 139 inches long, this was the shortest car sold in America. Behind the Yugo venture was Malcolm Bricklin, responsible for the Bricklin supercar of the 1970s and the man who pushed the recent, attempted ZMW project. Yugo of America's advertising compared its little car with the Ford Model T, and the Volkswagen Bug, for its ability to offer a brand new vehicle at a rock-bottom, $3995 price

Yugo of America headquarters in New Jersey, in the late 1980s

Painting, assembly, and shipping of the original Yugo in Kragujevac, Yugo-slavia. Rust-proofing would, true to its Fiat roots, prove to be inadequate

Initial tests found quality control and safety lacking, to the point where the initial batch of Yugos were returned for modification. Later models were better in these aspects

Yugo's 1.1-liter engine: small, but so was the car. The original Yugo, thus equipped, managed a run from rest to 60mph in about 13.7 seconds, with a top speed of 96mph

The Cabrio, launched in 1990, was the lowest-priced convertible available in the U.S. For just $8,000, it offered a power top and heated glass rear window. The more modern, Fiat Tipo-based Yugo Sana, planned for a 1992 introduction, never saw the light of day in the U.S. due to civil war in its home country

Most Yugos in the United States have either been junked (above), or are cared for by fastidious owners. There is even a $20,000, 78-mile Cabrio on the web, believed by the owner to be the last in its condition. Paradoxically, the quality of the maintenance they provide their cars has led them to swear by the reliability of the little cars to the same extent that disenchanted, less careful original buyers discarded them in disgust. Only one authorized Yugo parts distributor is left in the United States: Orion Automotive, in northwest Houston. While there are only about 2,000 Yugos in Texas, Midwestern states such as Ohio and Illinois are relative hotbeds for the car

Despite a controversial NATO bombing campaign which, oddly enough, seemed to target the Yugo itself (top), the car has continued in production. Facelifts (middle & bottom) have kept the original 'Yugo' - now badged 'Tempo' - alive in its home market

The old Skala ("101", top) and Skala 128 (bottom) concluded production in 2001, after a thirty and twenty-three-year run, respectively

Zastava (http://www.yugo.co.yu) automo-tive production today continues with the three-door Tempo, Cabrio (above), and five-door Florida (bottom)

ZMW Cabrio I 2005 rendition: myzmw.com ZMW Cabrio I 2005 rendition: myzmw.com ZMW Cabrio II 2005 rendition: myzmw.com ZMW Cabrio II 2005 rendition: myzmw.com ZMW Florida 2005 ZMW Pickup 2005 rendition: myzmw.com

ZMW plans had included the import of the Tempo 3-door hatchback and Cabrio, a possible facelifted Cabrio, and facelifted versions of the Florida and pickup (bottom). MyZMW.com remains an active site, although Rick Moore of NUCARCO assures us that plans to import Zastava vehicles under the 'Zastava Motor Works' label have been dropped

Malcolm Bricklin's fledgling, New Jersey-based NUCARCO import operation confirmed to us last week that the Yugo-ZMW venture has ended, due to political instability in the former Yugoslavia.

This was our second Yugo encounter of the week, having started with an e-mail sent to us by a commendably open-minded reader enquiring what we knew about the little car.

With fuel prices climbing across the country, he had found a low-mileage example he was considering as a runabout.

We sent him to Yugo@listbot.com, and listed several Yahoo! groups, noting that owner support for the car was strong.

"This is a subcompact front-wheel-drive car," we wrote, "with all the advantages and disadvantages inherent within.

"The front compartment has plenty of room, the rear much less so. Parts are readily available from Orion Automotive in Houston.

"Check the car's records to assure that the owner wasn't to blame for neglecting normal upkeep (which includes use of 89-octane fuel, 50,000 mile timing belt changes, and 20W40 oil in the high-compression engine)."

"Apparently," we added, more tongue-in-cheek than some of the actual Yugo racers that crop-up on the 'net from time to time, "Yugos do surprisingly well in racing, due in part to transverse rear springing. Truth be told, the Italian engines are quite willing."

Put the two encounters together, and we could not resist but note that the end of the Yugo-ZMW has brought to a close several promises toward which the general media has been relatively apathetic, including:

• The availability, in the U.S. market, of new, $7,000 vehicles;
   

• the return of Peugeot powertrains to the American landscape, ahead of a PSA return we have been promised for years since Peugeot pulled out in 1991,
   

• and the initial promise of a wild variety of body styles, including three-door sedans, five-door sedans, a convertible, and a pickup.

Indeed, it had looked to us as though the deal just might go through, despite the perennial problems in the Balkans.

For one thing, Yugo sold 133,131 cars in the United States between the 1986-1990 model years, more than European counterparts Peugeot, Alfa Romeo, or Sterling (all three of whom have now left our shores, and none of whom experienced the same political difficulties as did Zastava).

For another, Yugo's brand recognition - if negative - remains very much alive in the U.S. More about this, later.

From a technical standpoint, we find ourselves astounded by some of the blind bashing that has continued in mainstream circles.

Zastava - thanks to Fiat - had front-wheel-drive in the '70s, before most Japanese manufacturers had ever thought about putting it in their subcompacts.

The Yugo of 1986 was superior in some ways to Asian-built vehicles fielded by GM and Ford, and Yugo in 1990 had fuel-injection as many in its class were still thinking that this, more reliable and powerful configuration might be a good idea.

ZMW's plans were to comprehensively update the car's mechanicals, and even styling - while charging less, relatively, than the cars had cost in 1986! Again, more about this, below.

Finally, circumstances have begun repeating themselves. Gas prices have climbed although, as in the Yugo's introduction in the summer of 1985, not to the level of a crisis.

Many will remember the Suzuki-based Chevrolet Sprint (and subsequent Geo and Chevy Metros), and Kia-based Ford Festiva of the mid- to late-‘80s. Just as when the original Yugo appeared at at the L.A. Auto Show at the end of 1984, Chevrolet has brought in a Far East-derived subcompact in the form of the Aveo.

Given that the Yugo first appeared here 15 years after Fiat 128 production began, and eight years after Fiat cancelled the design in favor of the more modern Strada, it is easy to see just how disadvantaged the car was in terms of design when compared to its contemporary American-market rivals.

Certainly, the Fiat 128-derived 101 sedan (exported to the UK, not available on our shores) met with criticism in Western export markets, but provided low-cost, front-wheel-drive transportation at a time when ,most of the Japanese were still discovering that particular layout. It helped that the 101 was more or less loosely based on relatively lively, if dated, Fiat models.

However, the Yugo of America project met with considerable success. American buyers found it small, but thought it a good value as basic transportation. As soon as it was announced that the Yugo would go on sale, people stormed the ninety Yugo dealerships, and put down deposits on the cars - some without having even seen them.

By the time 1500 cars had arrived, dealers had orders for five times that amount.

The Fiat 128-derived Yugo GV cost $3995, at a time when a base Ford Taurus cost approximately three times as much. Few cared that the GV was based on a Fiat last sold in the U.S. six years earlier (1978).

ZMW would have replicated that positioning, with a line-up of vehicles based on either a heavily modified Fiat 128 platform or the newer, Fiat Tipo mechanicals (1987).

It bears noting that, with its aging Cavalier design, GM still holds the same 20% of the compact market as it did when the car replaced the Chevette in 1981.

General Motors is only just replacing its perennial Cavalier with the Cobalt; certainly, the Cobalt looks to be an exemplary piece of work.

However, ZMW had planned to sell two - in some cases, three - of its vehicles for the price of a Cobalt.

• a Fiat 128-based convertible and three-door sedan
   

• a Fiat Tipo (circa 1987)-based five-door and pickup truck

While the underpinnings of these vehicles would hardly have set enthusiast fires alight, the sheer unlikelihood of their availability would have added color to the industry that budget vehicles such as Kia have thus far failed to do.

Do not think, dear reader, that we are misty-eyed about mere image; the promise of technical merit in the form of a contemporary, deliciously delicate (for this category) drivetrain was on the table - courtesy of Peugeot.

The first Yugo was powered by a 1.1 liter (1116cc) four-cylinder engine. The little 60hp SOHC with its 5-speed stick-shift ran from rest to 60mph in about 13.7 seconds, and saw a top speed of 96mph. This could never be called quick, but the 4-banger - true to its Italian roots - loved to rev and would move the 1832lb car better than expected. Mileage varied between 31 and 55mpg.

The problems at Yugo of America have left the power improvements of the late '80s forgotten. In 1987, the GVL (touring), and GVS (limited edition) were launched, along with the  GVX (Sport) the following year. The latter packed a 61hp @ 5,000rpm, 68lbs-ft@4,000rpm , 1300cc engine.

By 1990, the $5000 GV Plus boasted fuel injection; the Bosch system bested even some of the Japanese competition. The Hyundai Excel, Mitsubishi Precis, Subaru Justy, Toyota Corolla, and Toyota Tercel remained carbureted - and higher-priced - competitors.

Admirable though this might have been, more would be expected of ZMW in 2005. Modern, Peugeot engines were planned for the U.S.

The potential this might have created for an eventual Peugeot return, as well as for small cars that featured the economy of diesel in the American market, cannot be overlooked. Why is Volkswagen the only small-car diesel player in the U.S. market?

Why, too, must budget cars feature horrible stick-shift transmissions? Not one stick-shift Kia we have driven has had any of the brio of even the original Yugo's box. The Cavalier's Getrag is good, but at a price premium far above that at which the ZMW's French joie-de-vivre box would have been offered.

The Yugo's Achilles Heel was always a lack of refinement, the point most often brought up by journalists who returned unimpressed: noise, vibration and harshness control was non-existent.

True enough, this was a basic car. That it had any enthusiasm at all was a bonus. There was no glovebox, flimsy plastic lined the interior, and the horn sounded like, as one buyer put it, "it was lifted from that 'Little Nash Rambler' song."

Mind you, the strategy - if not the final result - was sound. Standard equipment included power assisted front brakes (drums at the rear), rack and pinion steering, fully independent front suspension, fabric upholstery, full carpeting, reclining front seats, folding rear seat, rear window wiper/washer, opening rear quarter windows, rear window electric defroster, low fuel warning light, cigarette lighter, locking gas cap, and a full size spare tire. There were few options: air conditioning, stereos, floor mats, wheel covers, and roof racks.

Malcolm Bricklin is not an incapable man, having introduced Subaru to the U.S. in 1968 as well as the Yugo in 1985. One assumes that basic refinement would have improved in twenty years, although we suspect that this particular attribute will never be Zastava's strongest suit.

Until more details of the planned modifications emerge, however, one can only wonder whether soundproofing and material tactility would have been adequate - even at this low price level.

Largely due to poor supply prediction, first-year sales of the Yugo fell well below what was predicted. Just as the first train left the Kragujevac, Yugoslavia factory to great celebration, so too did it return to great disappointment: the first batch of cars did not adhere to American safety standards, and the first batch of Yugos imported to the U.S. market were returned for modification.

Despite the critics and the insurance industry's findings of poor crash worthiness, sales in the US rose for '87, peaking at 48,000 units.

Within two years, cheers from the public had turned to jeers. The car had inherited the Fiat 128's quality control and rust protection foibles. Many owners complained of mechanical problems including premature engine failure, bad brakes, faulty electrical systems, and indifferent dealer service.

It should be noted, however, that part of the reason for the problems was the car's terrific price advantage. This factor caused buyers to adopt a 'disposable-car' mentality and neglect even minimal maintenance, including basic oil changes, and the crucial timing-belt change every 40,000-50,000 miles.

Yugo enthusiasts today continue to swear by their cars' reliability. With the help of, most notably, Orion Automotive, they keep their cars going; some have seen the odometer turn over more than twice.

Launched nine years ago as a dealer in Fiat equipment, Orion now does virtually all of its business in Yugo parts. Five days a week, Orion ships out somewhere between 15 and 20 packages. "It was designed for small cities in Yugoslavia, so small towns are the Yugo's natural environment," Orion's owner, Hadrian Swager, told USA Today two years ago.

As Yugo launched in the U.S. market, however, Fiat was pulling out. With Peugeot's interest in a potential return, one might assume that the French company would have taken care to ensure adequate parts manufacturing standards and distribution.

Additionally, a modern engine requires less upkeep, and so the potential for ZMW to offer free basic maintenance (which might offset owner neglect) for the first few years of ownership might have been feasible.

It is our opinion that Yugo was forced out of the market due to civil war rather than a lack of interest in its products. More is the pity that the same circumstances seem to have played a role in precluding it from our roads yet again.

It is true that, in early 1989, Yugo of America filed for bankruptcy. However, this also meant that no new models were brought in for '89, so dealers sold their '88 stock (which amounted to only 10,576 cars for the year). While a 75% decline over the previous year, it is both explained by supply issues, and higher than (again) Peugeot, Alfa Romeo, or Sterling were able to manage.

Reorganization under the parent company Zastava, however, brought Yugo of America back to life by the end of the year. Although improvement - and the introduction of the five-door hatchback Sana (based on the then-European-Car-of-the-Year Fiat Tipo) - was sorely needed, Yugo bought time by upgrading to the GV Plus for 1990, and importing the Cabrio.

Yugo shifted only 6,000 units in 1990. Even so, it outsold the $7295 Suzuki Swift, and Peugeot, Sterling, and Alfa Romeo's entire line-ups, in the U.S. that year.

Approximately 100 of the 6,000 units were Cabrios, imported between 1990 and 1991 and trickling through the production line due to impending political upheaval in Yugoslavia.

The final '91 models came with larger gas tanks, better seats, better steering, and the option of an automatic transmission (all prior Yugos had come only with a stick-shift).

It was too late. Within a matter of months, Yugoslavia was plunged into war. The car without a country shared the destiny of Yugoslavia. It had been assembled from parts made in all of the former Yugoslav republics. Production stopped, and Yugo of America faded from view as quickly as it had appeared.

At $8000, the 1990 Yugo Cabrio was twice the price of its original hardtop hatchback 'sister' car, yet the cheapest convertible in America (we believe, ever, in relative terms). It featured an electric folding top, a heated glass rear window, automatic folding quarter windows, and an 'aero' body kit (which included fog lamps). Weight remained under 2,000 pounds. The lack of modern day appreciation for this vehicle is - we submit - more snobbish than enthusiastic.

In addition, the Fiat parts of latter-day cars of socialist Yugoslavia - which eluded the Eastern Bloc - were full of the Italian brio that had been driven out of communist rivals such as Lada. Peugeot's smaller engines feature a similar appetite for revs, and French gearboxes are second to none in the small-car class.

Launching a brand in the American market costs, according to Eric Davison, $100 million in advertising (Snake Bit, Eric Davison, Motorbooks, 2004). This, then, is a major barrier of entry. On the other hand, Yugo still has superb brand recognition in the American market, and - if the craftily named ZMW would have been more than happy to hide its roots - the press would no doubt have fleshed them out.

We recognize that Yugo's image is predominantly negative: however, we would submit that a negative image is far better than none at all. How else to explain the wonders that Volkswagen has worked with Škoda in the UK, the butt of jokes prior to a VW-orchestrated campaign of quality?

Zastava's problems have not always been of its own making, and - like the American buying public in 1986 - we sympathize with the underdog; particularly, it must be said, in an era of corporate mergers and mass attempts for short-term profit with the most prestigious of brands.

Moreover, Zastava's tenacity deserves some respect. Despite its departure from the American market in mid-1991 due to the start of the Yugoslav Civil War, the company struggled to maintain production for its home market.

Through the civil war, Zastava struggled to maintain production. By the time that NATO had become involved, the company became - much to its surprise - a target. In April 1999, despite an open letter from the workers of Zastava, NATO bombed the Yugo factory, as part of a somewhat disingenuous assault on both the military and civil infrastructure of Yugoslavia. Employees had actually formed a 24-hour 'live shield,' attempting to save their workplace from destruction.

To an extent, their attempts succeeded. Zastava produced 8,800 cars in the first half of 2000, the last set of figures we were able to obtain. Production continues today - what enthusiast would not hold a little deference for such obstinacy?

The car America knew simply as "Yugo" continues, having been renamed, 'Tempo.' The Tempo comes with 1.1 and 1.3-liter Bosch-injected engines that produce approximately 80hp, with a Porsche-licensed stick-shift transmission, and with promised improvements to safety. The Cabrio continues production, as does the Florida five-door hatchback.

As things stand, there are no firm plans to export. Yet the possibilities that ZMW explored show what could have been done to widen demand for the cars.

ZMW had planned to import the Tempo and Cabrio, a face-lifted Florida, and a Florida-based pickup truck.

MyZMW.com is still an active site, although Rick Moore of NUCARCO assures us that plans have been dropped. In our view, it is a sad loss that most will never know about.

Therein lies the key: Yugo-ZMW was not simply about demonstrating to buyers the benefits of low-cost transportation (which, it must be said, is neither our focus nor our passion).

Instead, its potential lay in the return of a plucky underdog and of Peugeot drivetrains; in an education - directed at  American buyers - of the benefits (and yes, even joy) of low-weight vehicles; in a demonstration of what a shoe-string budget might engender, similar to MG-Rover's own predicament (article), and in the potential promise of French, common-rail diesel engines (with the uniqueness, reliability, and economy that implies).

In a USA Today piece two years ago, Hadrian Swager of Orion Automotive noted that most of his parts do not cost a lot of money, citing a $12.10 - shipped - window crank as one of the most popular items. It seems fitting; Bricklin always said that his goal was to get owners of budget cars "feeling smart about their choice."

"The average resale for a Yugo is $500 to $1,000, so you are not going to get a lot of people spending $500 on parts," Swager added.

"But business is surprisingly good. I didn't think it would last this long, but it has."

We feel smarter having toed a decidedly different line with this article. To paraphrase a popular Fiat line many decades ago, 135,000 Americans can't be wrong. Even given public perception, and the perpetuation en masse of poorly-supported folk tales, ZMW - like MG-Rover - had the chance to take lemons and make lemonade. We would submit that the industry is poorer for the operation's failure to provide the bargain buyer with some truly offbeat, charismatic choices.