Yugo Is Back With A Manual Bang, And The GTI Is In Its Sights

If you were alive in the 1980s and living in the United States, you may have a vague recollection of a cheap car called the Yugo. Built by a company called Zastava in what was then known as Yugoslavia (now Serbia), this small hatchback, which started life as a Fiat 127, quickly earned a reputation as an automotive punching bag due to its poor design and reliability. In an event that we would never have on our 2025 bingo board, the Yugo is making a comeback.

Yugo first hinted at a revival earlier this year with a design sketch, and just took a baby step forward by showing off a scale model of what the new car could look like at Car Design Event 2025 in Munich, Germany. The small, two-door hatchback retains the boxy shape of the 1980s original, but modernizes it with LED headlights, sporty wheels, and even a red stripe that reminds us a lot of the Volkswagen Golf GTI.

Gunning For The GTI But With More Options

Styling isn’t the only department where the GTI might be challenged. The Yugo may even rival the GTI’s performance with a “sporty derivative.” The company hasn’t zeroed in on a powertrain yet, but mentions naturally aspirated and turbocharged versions, a manual and automatic transmission, and different body styles besides the two-door shown in model form. There could also be an electric version. Clearly, this project is in its early stages.

If you are old enough to remember the original Yugo GV, which was also sold as the Zastava Koral/Zastava Jugo/Yugo Koral in other markets, you know it wasn’t known for being a “hot” hatchback. The biggest engine was a 1.3-liter four-cylinder, which only produced 65 horsepower.

Who? What? When? Where? Why?

We have so many questions about this new Yugo project, and there are a limited number of answers available as of this writing. Let’s start with “who.” The Yugo revival is being headed by Professor Dr. Aleksandar Bjelić, a German resident who secured the naming rights to the brand. The original sketches were penned by Darko Marčeta, a Serbian designer. As we stated, there are almost too many details about what the car will be, but we do have a rough idea of when the picture will become clearer.

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More details, along with the aforementioned sporty variant, will be revealed on September 15, 2025, at another design event in Germany called CDE Classic. This should give us more concrete details about the new Yugo, but we won’t see a production variant with a drivable prototype until 2027 at the Belgrade Expo. At least Grand Theft Auto 6 should be out by then. Why is Bjelić undertaking this project? The goal is to make an affordable car that pays homage to the original. It’s highly unlikely that Yugo will return to the U.S., but we are still happy to see a new sporty hatchback announced to the world, and this early on, anything could happen. Stay tuned.

H/T: CarScoops