Yugo Slams Brakes on Sales in U.S. : Autos: The company’s withdrawal is being blamed on civil strife in its homeland.
The Yugo, which attracted motorists in the 1980s with its ultra-low sticker price but drove them away with its quality problems, has been withdrawn from the U.S. market, leaving dealers and owners in the lurch.
Yugo America Inc. told dealers in a letter last week that the compact car was a victim of civil strife in its European homeland.
The company, a unit of Yugoslavian auto maker Zavodi Crvena Zastava, filed a Chapter 7 bankruptcy petition in Newark, N.J., last week, seeking to liquidate its assets.
“Yugo America is done unless the factory decides it could find a new distributor,” company attorney Bruce Buechler said.
Ray Potts, service manager of Ken Smith Lincoln-Mercury-Yugo-Peugeot in Ridgewood, N.J., said that shortly after he received the letter announcing Yugo’s U.S. withdrawal, he went to Yugo America headquarters in nearby Saddle River and found it empty and locked.
“It was very fast,” Potts said. “They’re gone. This has been a nightmare.”
Potts said Yugo America informed dealers late last week that Zastava had made the decision to retreat.
“The manufacturer based its decision primarily on uncertainties in Yugoslavia which have made it impossible to provide Yugo America Inc. with a regular and dependable supply of vehicles and necessary financial support,” the company said in the letter.
Yugo America added that it was “presently investigating the possibility of continuing to supply spare parts for Yugo vehicles in the U.S.”
Michael Nardo, general manager of Dave Miller Oldsmobile-Isuzu-Yugo in Matteson, Ill., said Yugo never recovered from its Chapter 11 bankruptcy filing in 1989, even though it emerged as a reorganized company.
“After the first time they went out, they couldn’t dig out their reputation again. They were running a defunct corporation,” Nardo said. “Sometimes they had a commitment; sometimes they didn’t. They were wishy-washy.”
Nardo said Yugo America owes the dealership about $8,000 for warranty work, and Yugo has not paid warranty claims for several months. Nardo has only one Yugo in stock, a brand new 1988 model that he has been unable to sell, even with a $2,000 discount from its $4,495 sticker price.
He even has attempted to give the car away with the purchase of a $30,000 Oldsmobile 98 Regency.
The Yugo, based on a design by Italian car maker Fiat, was first sold in the United States in 1985 for less than $4,000. But many drivers were turned off by the car’s initial poor quality and reliability record, dealers said.
