Business Notes AUTOS

Although a Yugo can be had for less than $4,000, making it the cheapest car in the U.S., its fortunes have been flagging. Americans bought only 43,000 of the glitch-prone subcompacts last year -- well below predictions made when the two-door hatchback was first imported from Yugoslavia in 1985. Now a consortium organized by the Mabon, Nugent investment firm in New York City has paid $40 million to gain control of Yugo America and has promised to spend $40 million more for a campaign to tout new models.

This fall the company will introduce a convertible (base price: about $8,000). It and all current Yugos will be backed by perhaps the most generous auto warranty ever. During the first year, all parts and maintenance, from routine oil changes to not-so-routine repairs, will be free. Next year a sleek four-door model will be available. Yugo officials say it will be snazzy and dependable. Says Senior Vice President Tony Ciminera: "You won't even know it's a Yugo."