Ford, Romania Wrap Up Craiova Auto Plant Deal

The deal has been delayed by a recent probe of the European Commission, which ordered the Romanian government to recover an illegal EUR27 million state aid from Automobile Craiova.

The commission accused Romania of underselling Craiova to Ford, but allowed the sale to go through provided the state aid is paid back.

Romanian Prime Minister Calin Tariceanu said during a ceremony held in Craiova to seal the plant takeover that the deal will help Romania become one of the most important players in the automotive industry in Southeastern Europe.

The Romanian car industry has been one of the most lucrative sectors of the country’s economy in recent years and has been attracting more and more interest from foreign investors, such as French carmaker Renault and potentially Germany’s Daimler and Japan’s Mitsubishi Motors.

Ford pledged to invest EUR675 million to upgrade the Craiova plant, which will produce the small cargo van Ford Transit Connect by mid-2009, Ford Europe CEO John Fleming also said Friday in Craiova.

Fleming also said Craiova will exclusively produce and export a new Ford model in 2010 and denied market rumors alleging it would be the new Ford Fiesta. He didn’t provide further details citing confidential terms.