In 1955 the Automotive Factory ‘Crvena Zastava’ (Red Flag factory) began to manufacture automobiles based on the FIAT license and became a driving force of the communist Yugoslavia transformation from an agrarian into industrialised, urban and motorised country. This paper explores Zastava’s experience of building and developing the Yugoslav automobile industry in the context of the Yugoslav self-management system from the 1950s to the 1980s. The article aims at showing that the concept of self-management was sensible in light of the multinational Yugoslavia break from the Soviet bloc, but that the net effect of its implementation proved problematic for the national automobile industry. Additionally, Zastava leadership attempts to achieve a larger industrial scale and financial autonomy clashed with the Yugoslavia trend towards decentralisation as much as the communist leadership’s fear of an alternative centre of power.