So the story appears to be: the folk-pop figure personality Severina Vučković makes a guest appearance on a television station in Kragujevac, in the course of which she receives as a gift one of the legendary "Yugo" cars from the Zastava factory. This leads her commercial sponsor, the Croatian representative of Mercedes Benz (or Daimler Chrysler, I presume?) to announce a lawsuit against her. No doubt the competitive pressure is difficult for MBZ to bear. Leaving aside whatever differences in quality, comfort or reliabilty that may exist between the product from Stuttgart and the product from Kragujevac, there does not seem to be much question which company's directors have a better sense of what makes for good publicity.
Update: TV 9 in Kragujevac says it ain't so, that Severina did not ask for a car, the station did not contact the factory, and the factory did not provide one. They do, however, invite people to support a campaign to raise funds to buy a car for the use of the safe house for women and the center for children who are victims of violence in Kragujevac.