The Yugo: The Rise and Fall of the Worst Car in History

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Yugo Girls!

Q: How do you double the value of your Yugo?

A: Fill the gas tank.

The original idea to sell the Yugo in America came from California entrepreneur Miroslav Kefurt, who in March 1984 imported three Yugo 45s for display at the Los Angeles AutoExpo. Slight of build yet long in personality, Kefurt was a character. He had come to Los Angeles in 1969 from Prague, Czechoslovakia, where he and his father sold used cars. The Kefurts specialized in one model, the Fiat 600, which they sold in one color: red. "It wasn’t that Czech car buyers were demanding red Fiat 600s," remembers Kefurt, "it was because private car dealing was illegal." Technically, Czech citizens could sell their cars only after their odometers had reached 5,000 kilometers. But buying and selling used cars in quantity, as a business, was against the law. Thus, there were no used car lots in communist Czechoslovakia. Buyers simply found their cars through word of mouth or ordered new cars directly from Czechoslovakia’s two main auto producers, Skoda and Tatra.

However, like all Soviet bloc countries, Czechoslovakia had government waiting lists for new cars. To buy a Tatra 613, for instance, car buyers paid full price in advance, then waited six months to a year for delivery. The buyer had no say over the car’s color or interior, and received no warranty of any kind. "That was one of the flaws of a communist country," states Kefurt. "Somebody in the government would make a decision of how much of anything could be exported, imported, manufactured, or sold . . . It was the same thing with cars. The government didn’t make enough new cars, so a black market developed for used ones . . . But since it was illegal for people to deal in used cars as a business, my father had to be careful. That’s why he bought the same make and model [the Fiat 600] over and over, then drove the cars for five thousand kilometers before selling them at a profit. Nobody could tell these were all different cars. It was good business."

Kefurt’s father was a tour guide by profession, which meant he could acquire new Fiat 600s during business trips to northern Italy. He would buy a car, drive it back to Czechoslovakia, then bribe a guard at the border. "Bribes always worked in those days," remembers Kefurt. "You could bribe anyone for anything." His father bought three or four Fiats per year, and each family member had a Fiat registered to them. The goal was to put 5,000 kilometers on each car, a daunting task for the Kefurts, considering the poor roads and lack of interstates in Czechoslovakia. In 1967, for instance, the Central Intelligence Agency estimated that Czechoslovakia had 46,000 kilometers of roads, of which only 10,000 kilometers were paved. By contrast, the United States had over 3 million kilometers of roads, of which 1 million were paved. That was when Kefurt’s father had an idea. He and his son would race their Fiats in local road rallies to burn the 5,000 kilometers.

Kefurt began racing at age fourteen; at sixteen, he placed in one of Czechoslovakia’s main road rallies and was well on his way to becoming a professional driver. But in 1969 Kefurt decided to leave Czechoslovakia to live with an uncle in the United States. Through various family connections he secured an exit visa and began working at his uncle’s restaurant in West Hollywood, California. Kefurt arrived in the United States in 1969, the same year as Woodstock, the launching of Apollo 10, and the first troop withdrawals from Vietnam. As a student at Hollywood High he found most of his friends owned muscle cars: Pontiac Firebirds and Plymouth Barracudas. They were a far cry from Kefurt’s Fiat 600.

One day while walking along Santa Monica Boulevard, Kefurt passed a Honda motorcycle dealership, which had just displayed the company’s first-ever imported automobile in its showroom window, a tiny two-door sedan known as the 600. By almost any mea sure, the Honda 600 was a midget. At a length of 125 inches, the 600 was nearly three feet shorter than the Volkswagen Beetle. At 1,355 pounds, it also weighed 500 pounds less than the Beetle. In addition, the Honda 600 had a four-speed manual transmission, a unibody steel construction, and reached a top speed of 80 miles per hour. The price: $1,275. Kefurt was in love. "Compared to the Fiat 600," he states, "the Honda 600 was a rocket."

Like many small-car enthusiasts, Kefurt favored the 600’s handling to that of larger and more powerful muscle cars. He eventually bought other 600s and opened a business fixing the cars for Hollywood-area owners. Though Honda stopped selling the 600 in 1972, in the early 1980s Kefurt discovered that people were willing to spend thousands of dollars to restore their tiny 600s. The car had a real following, so much so that Kefurt developed a profitable Honda 600 business and was known locally as a small-car guru. He drove and tested not only Hondas but also any other small car he could find. In 1982 Kefurt read that socialist Yugoslavia was producing a new two-door hatchback based on the Fiat 127 and with a 903cc, 45-horsepower engine.

Known as the Yugo 45, the car was cheap (by American standards) and, in Kefurt’s words, "an import opportunity just waiting to happen." The Yugoslavs planned to export the car to Great Britain in mid-1983 but had no such plans for the United States. Therefore, in the summer of 1982 Kefurt hopped into his Honda 600 and drove to the Yugoslav consulate in San Francisco. At the time, socialist Yugoslavia had consulates in California, Illinois, New York, Ohio, and Pennsylvania, as well as a sprawling embassy complex in Washington, D.C. In San Francisco, Kefurt met with an official commercial attaché who assisted him in contacting the Yugoslav auto manufacturer Crvena Zastava, the maker of the Yugo 45. Located ninety minutes south of Belgrade in Kragujevac, Serbia, Crvena Zastava had been established in 1953 in a failing armaments plant in the city center.

The name Crvena Zastava means Red Flag in Serbo-Croatian, as in the red flag of communism. In later years the Yugo 45 would send up a different red flag among Western consumers. According to economic historian Michael Palairet, the car "was badly built, like all Zastava’s cars, and bottlenecks of every kind limited output." Although in 1962 Zastava teamed with Italian car manufacturer Fiat to build a new $30 million factory on the outskirts of Kragujevac, by the 1980s its facilities were outdated. According to one observer, "By US, Japanese and Western European standards, the Zastava works are a throwback to the Dark Ages—a Diego Rivera mural choreographed live. Noisy, smoky, and in many places poorly lit, the facilities teem with workers . . . OSHA [the U.S. Occupational Safety and Health Administration] would have a field day here." Zastava also lacked many of the production standards then common in the West, which was the direct result of being the only true car manufacturer in a protected market.

Kefurt had never been to Kragujevac. He also had no experience with Zastava’s low-quality motorcars. But he knew that the Yugo 45 was essentially a Fiat, a car sold in the United States in one form or another since 1957. Even though Fiat had announced that because of poor sales it was leaving the American market, Kefurt believed that he could "keep" Fiat in the United States by importing the Yugo. For that, however, he needed a license, so with the help of the Yugoslav commercial attaché in San Francisco, in 1982 Kefurt sent a telex to Yugoslavia’s state-run export company Genex. Short for General Export, Genex was socialist Yugoslavia’s main trading house, whose job it was to sell consumer goods and other commodities for over 1,200 domestic firms. In 1982, Genex did $4 billion in business. The company had offices in some seventy countries and in 1986 introduced McDonald’s to Yugoslavia.

Genex put Kefurt in touch with Zastava, but officials there were skeptical that consumers in the United States would buy Yugos. Remembers Kefurt, "They told me that Americans wanted V-8s, that Americans wanted air-conditioning and automatics and that Zastava just didn’t make them." Nevertheless, Kefurt was determined. He pestered Zastava until late 1983, when the company awarded him Yugo 45 distribution rights for the state of California. There were no contracts, no negotiations, and no paperwork. In fact, Kefurt’s Yugo license, if it could be called a license, was a one-page telex. It stated that beginning with the 1985 model year, Zastava would provide Kefurt with five thousand cars annually. The telex said nothing of price. What is more, Zastava offered no guarantees and demanded that Kefurt pay for each car up front.

License in hand, in November 1983 Kefurt ordered three Yugo 45s from Kragujevac. They cost a grand total of $7,200 and were shipped to Los Angeles in a forty-foot container that arrived in March 1984. Kefurt was beside himself. He’d spent less than ten grand and was now owner, president, and CEO of YugoCars, Inc., the official distributor of Yugo 45 automobiles from Yugoslavia. Kefurt knew it was a long shot, that most Americans wanted V-8s, and air-conditioning, and automatic transmissions. But timing was on his side. Just two months earlier Yugoslavia had hosted the XIV Winter Olympiad in Sarajevo and ABC had given the Games over sixty-three hours of television coverage. There were Sarajevo placemats at McDonald’s, Sarajevo postage stamps from the U.S. Postal Service, even a thermos and bowl set from Campbell’s, the "official soups" of the 1984 Winter Olympics.

Night after night, reporters praised Yugoslavia for its efficiency. The Yugoslavs have done "every thing capitalists say socialists can’t do," exclaimed one. Buses "run frequently and on time . . . Messages are delivered quickly . . . [and arriving American journalists are] whisked to their village, assigned porters, and shown to [their] rooms . . . Skeptics said [Yugoslavia] couldn’t handle a modern Games. Well, wherever Marshall Tito is these days . . . he must be smiling. What the Yugoslavs have pulled off is a tribute to the virtues of nonaligned socialism." The Sarajevo Games closed on February 19, 1984, and were described by Juan Antonio Samaranch, the International Olympic Committee president, as "the best organized Winter Games in the history of the Olympic Movement."

Next up: Los Angeles. As Kefurt waited for his first shipment of Yugos to arrive in California, Los Angeles readied itself for the 1984 Summer Games. The Games’ chief organizer, Peter Ueberroth, actually "wondered aloud whether Los Angeles would be able to muster the [same sort of] enthusiasm that Sarajevo had" in supporting its Olympics, then praised Yugoslavia for being one of only three communist countries then planning to attend. (The others were China and Romania.) Since early May, a group of fourteen communist countries led by the Soviet Union had been boycotting the Games because, as the Soviets claimed, the U.S. government had failed "to guarantee the safety of Soviet athletes" in Los Angeles or "squelch the activities of private anti-Soviet groups in California."

The Soviets alleged that CIA operatives were planning to give psychotropic drugs to Russian athletes in order to "trick" them into defecting, and had "infiltrated members of terrorist and extremist [groups]" into Ueberroth’s organizing committee. Ueberroth was livid. If the Soviet Union and its allies failed to make it to Los Angeles, over half of the world’s "world champions" would be absent. It’ll be a "second-rate competition," said one official, "really no competition at all. [It’ll be like a] Pan Am Games with Asians and Africans . . . I mean, what kind of Olympics [is] that?" To ABC, the Games would be a bore, a profit-killing, audience-shrinking bore, which is why, in its contract with Ueberroth, it had stipulated that if the Soviet Union chose to boycott the Olympics, Ueberroth’s organizing committee would refund the network upwards of $90 million in fees. Although Ueberroth and ABC settled on a much lower figure, as of May 1984, Los Angeles needed a boost, something to remind viewers that America’s first summer Olympics in over fifty years wouldn’t just be competitive, it’d be watchable—in industry terms, "good TV." As it stood, ABC planned over 180 hours of coverage through two full weeks, nearly thirteen hours a day. For months, it had been charging companies as much as $260,000 for a thirty-second spot and had already sold over $428 million in airtime. "If ratings turn out to be less than expected," wrote The Wall Street Journal, "advertisers may ask ABC for compensation in the form of credits," maybe even refunds. Thus, when China, Romania, and Yugoslavia defied the Soviet boycott and sent teams to the Olympics, they were quickly dubbed Los Angeles’s "great Red hopes."

The Yugoslavs called the boycott deplorable and, in mid-May 1984, announced they were sending their largest Olympic team ever: 223 athletes competing in 19 different sports. As one Yugoslav coach put it, "We didn’t discuss the boycott at all. [And] why should we? We are an in de pen dent country, and we do what we feel is right. We will not be told what to do by the Soviet Union, or anybody else." Yugoslavia had been independent of Moscow since 1948 when its leader, Josip Broz Tito, announced he was pulling the country out of the Soviet bloc. In the coming decades, Yugoslavia maintained good (if not close) relations with both superpowers, but refused to ally itself with either. By 1984 its foreign trade was almost equally distributed between East and West.31 Yugoslavs drank Coke, wore blue jeans, did business with American firms such as Dow Chemical and Westinghouse, and traded their farm produce for Soviet oil. They "liked to play both sides equally," said one former diplomat. "They could really straddle the fence."

Yugoslavia was neutral politically, and since it had already competed in the 1980 Moscow Olympics, which the Americans had boycotted, it saw no reason to boycott the 1984 Games. "Sports are meant to be liberated from all political influence," said Ahmed Karabegovic, a Yugoslav Olympic official from Bosnia. And besides, "where the Olympics are concerned, the most important element is business." The Yugoslavs had learned that lesson in Sarajevo, where they’d made, by some estimates, at least $20 million. They wouldn’t make anything in L.A. They were only participants. But the Yugoslavs hoped that their anti-boycott stance, so praised in the press, would be a good form of "company" PR. And in fact it was. At the Games’ opening ceremonies, the Yugoslav team entered the Los Angeles Coliseum to thunderous applause, second only to the Americans’.

Yugoslav officials no doubt hoped that Americans’ goodwill toward Yugoslavia would mean that they’d buy, for instance, Yugoslav wines (such as Avia, which Coke distributed) and Yugoslav tools, furniture, and textiles. Who knows? Maybe even cars. At least that’s what Kefurt hoped. But then his Yugos arrived. They were red, white, and blue. They had yellow French headlights, tartan interiors, and retread tires. They were three of the worst cars Kefurt had ever seen. "I almost cried," he says. "Before then I had only seen pictures and the pictures were nice but now we can’t start things. The doors don’t lock. The windows don’t go up and down. Then I find paperwork in one of the cars saying that these three were factory rejects. They were supposed to go to France, but there were so many problems with them, the French sent them back!" Kefurt and his mechanic spent the next three weeks making the cars presentable. To the red Yugo, Kefurt added a sunroof, mag alloy wheels, and a "super-duper" stereo system, which he claims cost more than the car. He also took the red Yugo to Olson Laboratories in nearby Fullerton, California, where it underwent a series of emissions tests required by the state’s Air Resources Board (CARB).

The CARB set strict emissions standards for all new automobiles sold in California, which the Yugo promptly failed. The car performed poorly on its tests because it continued to use an antiquated carburetor. Thus, to sell Yugos in the United States, Kefurt faced a choice: he could equip the car with a cleaner carburetor, or he could replace the Yugo’s carburetion system with electronic fuel injection. Either way, he needed help from Zastava. "The carburetion was bad," remembers Kefurt. "So it was my decision to have a fuel-injected car. The fuel injection designed by Bosch in those days was fantastic, but Zastava wasn’t interested. I realized then that these guys didn’t want a successful car."

Undeterred, Kefurt made plans for the Los Angeles AutoExpo. He printed up Yugo 45 brochures, signs, and promotional literature, then recruited his wife and four teenage models to wear tight Yugo 45 T-shirts and miniskirts and attend the Expo as his "Yugo Girls." The Expo took place in June 1984 in the Los Angeles Convention Center. Kefurt’s display included his red, white, and blue Yugos, a plain, unadorned table, and folding chairs for his Yugo Girls. For some reason the Expo’s organizers had given Kefurt a premium display space next to the main entrance and directly opposite Mercedes-Benz. As a result, thousands of people visited Kefurt’s Yugo exhibit, where his five Yugo Girls were a hit. By show’s end, they had distributed four hundred Yugo T-shirts and twenty thousand Yugo brochures, and had taken forty-two $100 deposits on back-ordered automobiles. To demonstrate the Yugo’s toughness, Kefurt spoke to potential buyers while standing on the car’s roof. When at one point he dented the roof, he jumped down, reached inside, and popped out the dent out with a loud Thwop! "Go try that at Mercedes-Benz," he said, "and see what they tell ya! Go stand on a Mercedes!"

Eventually Kefurt’s Yugo exhibit drew the attention of Paul Dean, a reporter for the Los Angeles Times. "When the Big Three and the European Eleven and the Oriental Six go to car shows," wrote Dean, "it’s a million-dollar bazaar of revolving neon and Simonized gloss beneath sequins . . . Then there’s the Yugo 45 and Miroslav Kefurt. His booth is five folding chairs around a rented table and no potted chrysanthemums because they cost extra. The models, female, are Kefurt’s secretary and her Sun Valley friends uniformed in company T-shirts and red miniskirts. And the models, vehicular, are sedans made in Yugoslavia from a decade-old body design around an engine that’s been in production for 27 years."

Dean’s depiction of the cars themselves was direct—some might say brutal. Likening them to Spam cans with orange tartan interiors only the color-blind could love, he offered the opinion that their bumpers "wouldn’t smother a collision with a bowling ball."

However, to Dean, the Yugo wasn’t all bad. Its low price and its Fiat-built engine were in his words "a pretty hefty combination," while the beauty of the Yugo, wrote Dean, was in its "plainness." The Yugo is "simple, utilitarian, [and] honest. It performs the way it looks, and that look tells [you] exactly what it was built to be . . . a commuter car." Quoting Kefurt, Dean then compared the Yugo to the Ford Model T, the Volkswagen Beetle, and the Citroën DV2, giving it high praise as an inexpensive people’s car, a reminder of when automobiles "were for transportation, not status," when "turbo-charging was for airplanes and racecars," and when "lifting the hood revealed an engine, not electronic plumbing."

Although most likely Dean had never driven a Yugo—and although he had no idea that one of Kefurt’s three floor models had broken down en route to the AutoExpo—he portrayed the Yugo as a dependable foreign car and allowed Kefurt to pontificate on the Yugo’s supposed virtues. "It comes with no surprises," stated Kefurt. "Everything fits, every thing works, and it’s designed to last 15 years." Moreover, the Yugo "comes with a 10-year or 100,000-mile warranty . . . If anything major goes wrong with the engine you bring the car in and we change the engine because to us that’s the cheapest way."

Of course, the Yugo had no warranty: Kefurt’s entire contract with Zastava was that one-page telex awarding him five thousand cars per year. Zastava expected cash in advance. The contract made no promises to Kefurt and offered no guarantees of any kind. Thus, like any good salesman, Kefurt was telling buyers what they wanted to hear: that the Yugo was a smart, economical car "for people tired of model changes and [tired of] planned obsolescence." And, at $4,500, the Yugo would be the least expensive new car sold in the United States. In 1984 the average compact car cost $9,113, with the cheapest car being the Chevrolet Sprint at $5,151. According to the Hertz Corporation, in 1984 the average cost to own and run a compact car in the United States had reached an all-time high, amounting to 45.67 cents per mile. That figure was 5.5 percent higher than in 1983, and 172 percent higher than in 1972. The bottom line, reported Hertz, was that even small cars were expensive and that during the past twelve years motorists had been "driving less, keeping cars longer, and buying smaller vehicles with fewer options."

Known as "econo-boxes," these vehicles were almost exclusively Japanese. In 1980, six Japanese companies exported over 1.8 million cars to the United States, a staggering 27 percent of the American market. On average, Japanese cars were cheaper, better built, and more fuel-efficient than their U.S. counterparts were. In 1980, for example, only one American-designed car, the Chevrolet Chevette, had a fuel efficiency rating of more than twenty-five miles per gallon. By contrast, eleven Japanese cars did, with eight Japanese cars averaging more than thirty miles per gallon. In addition, nearly 50 percent of Detroit engineers queried in 1979 believed that Japanese cars were the highest-quality cars sold in the United States. (In the same poll, American cars received just 27 percent, while German cars received 23 percent).

Interest in smaller, more efficient cars had been growing in the United States since the mid-1960s, but exploded with the twin world oil crises of 1973 and 1979. In both instances, the Organization of Petroleum Exporting Countries increased the price of crude oil, causing U.S. gasoline prices to jump from 39 cents per gallon in 1973 to $1.38 per gallon in 1979. Consumers reacted by buying cheap econo-box imports. In 1980, a record 2.3 million Americans purchased some $13 billion in foreign-made automobiles. That same year, import sales jumped 21 percent, while sales of domestic cars plummeted 11 percent, to their lowest level since 1961.

Excerpted from The Yugo by Jason Vuic.

Copyright © 2010 by Jason Vuic.

Published in 2010 by Hill and Wang.

All rights reserved. This work is protected under copyright laws and reproduction is strictly prohibited. Permission to reproduce the material in any manner or medium must be secured from the Publisher.