Fiat to spend $1.3 billion to make Jeeps in Italy

The Fiat 500X subcompact SUV (shown) will replace the Sedici in the automaker's lineup.
TURIN -- Fiat will invest more than 1 billion euros ($1.3 billion) to build subcompact SUVs for the Fiat and Jeep brands in Italy. The move is key to the automaker's bid to boost capacity usage and end losses in Europe by focusing on high-margin cars.
"We decided to shift away from mass carmaking and compete in the upscale market," CEO Sergio Marchionne said today at the plant in Melfi, southern Italy, where the models will be assembled.
"This will be the only plant in the world to produce a new small SUV for Jeep," the CEO added.
Marchionne plans to boost sales of more expensive models to revive Fiat's European operations, which are forecast to lose 700 million euros this year.
Focus on Italy
The automaker is also under political pressure at home because of criticism that it's European arm is struggling now because it focused too much management time on its takeover of U.S.-based Chrysler Group.
Fiat Chairman John Elkann has a different view.
"Many say that [Fiat's] alliance with Chrysler took something away from Italy. Today we are showing the opposite. Without this alliance, the investment in Melfi would not have been possible," Elkann said in a statement.
Fiat intends to introduce 19 Italy-produced models through 2016, including nine Alfa Romeo-badged vehicles and six Maseratis. The carmaker plans to increase production of Fiat and Chrysler cars in Europe to 2 million cars a year in 2016 from 1.25 million this year.
Marchionne believes that by using Fiat's Italian factories to export cars around the world the automaker's European operations will return to an operating breakeven by 2015-2106. Troubles in Europe led the manufacturer to cut its 2014 trading-profit goal by 31 percent to 5.2 billion euros.
The Europewide plan, which will use 15 percent of Fiat's capacity in Italy, Poland, Turkey and Serbia for exports, may cost about 3 billion euros a year in investments through 2014, according to a chart shown in a Dec. 7 presentation on the automaker's Web site
Jeep first
Reversing a previous announcement, Fiat today said that production of the Jeep small SUV would proceed the Fiat model. Both will be underpinned by the Small Wide architecture that debuted this year on the 500L small minivan.
The Jeep model, pushed forward to debut in early 2014, is known internally as the B-SUV. It will be offered only as a four-wheel-drive model. The baby Jeep will be sold in Europe, North America and Asia.
Fiat's new SUV will be called the 500X, joining the 500 model's fast-growing portfolio. The 500X was previewed at a Fiat event in July. At about 4200mm, the Fiat SUV is slightly bigger than the 500L.
Fiat will offer 500X variants with either front-wheel or four-wheel drive. Production of the car is expected to start in the second half of 2014 with deliveries going to Europe and North America. The new SUV will replace the Sedici that Suzuki builds for Fiat in Hungary.
Bloomberg contributed to this report
PRESS RELEASE
Melfi plant to produce two new vehicles
Today at the Fiat plant in Melfi, Chairman John Elkann and CEO Sergio Marchionne – with Prime Minister Monti in attendance – presented plans for the production of a new
Jeep brand vehicle and a new Fiat brand vehicle beginning in 2014.
Following an investment program of more than €1 billion, Melfi will be one of the most advanced car assembly plants in the world equipped with the very latest technologies and managed according to World Class Manufacturing standards. Activities to prepare the plant for production of the two new models have already begun.
Those activities include modifications to existing production processes to accommodate the new modular Small Wide platform – one of Fiat-Chrysler's three principal architectures – which can be easily adapted to produce even larger vehicles.
The platform is configured for product content that complies with U.S. regulatory standards meaning that vehicles produced at the Melfi plant will be export ready, with no requirement for further modifications.
The first of the two new models will be a Jeep utility vehicle that represents the brand's entrance into a new market segment. Melfi will be the only plant in the world to produce this model and, as for all Jeep products, it will be sold in markets worldwide.
In addition to the new Jeep, Melfi will also produce the new Fiat 500X, the latest addition to the 500 family which is larger, more spacious and more capable than the 500L launched 3 months ago.
Once the plant upgrades are complete, Melfi will have increased flexibility with the ability to produce up to four different models on the same assembly line.
The planned investments will also include technological upgrades in all areas of the plant, including a new metrologically-equipped stamping shop, new panel and body welding lines, 500 new welding robots and introduction of the latest technologies in the paint shop.
The assembly area will also benefit from major upgrades with completely new equipment that will enhance work station ergonomics and logistics flows. Total production capacity based on three shifts will be 1,600 vehicles per day.