Marchionne planning to build Jeeps in Italy.
Chrysler and its Italian ally Fiat plan to team up in a European manufacturing venture that will expand the Jeep presence overseas.
Sergio Marchionne, who serves as CEO for both Chrysler and Fiat, says his company will invest $1.4 billion in the Mirafiori plant, in Turin, to permit the production of Jeep and Alfa-Romeo sport-utility vehicles.
The move could help Fiat achieve one of the critical benchmarks set by the Obama Administration as part of the Chrysler bailout last year. Fiat currently holds a 20% stake in the long-troubled American maker. Each of three key goals will boost that stake by 5%, including the requirement to boost Chrysler’s overseas sales.
But expanding cooperation between Fiat and Chrysler is critical for both companies to achieve the necessary sales volumes and economies of scale that Marchionne believes are necessary to compete in today’s global auto industry. The Fiat brand is making a comeback in the U.S., after a two-decade absence, with next month’s launch of its 500 microcar.
Going forward, Chrysler and Fiat plan to share key platforms and components. The new 2011 Chrysler 200 sedan, for example, will undergo an even more significant update in little more than a year as it migrates to a Fiat-based “architecture.”
The Alfa-Romeo sport-utility vehicle, meanwhile, is believed to be based on the new-for-2011 Jeep Grand Cherokee.
If the proposed venture goes through, the Mirafiori plant would see production jump from 178,000 last year to as much as 280,000. Half of that production could be slated for export, including some bound for the U.S., where Fiat hopes to also re-launch the Alfa-Romeo brand.
But Fiat also hopes to boost overseas demand for Chrysler’s various brands. Marchionne earlier this month forecast that Chrysler sales would surge to 2 million next year, with about a quarter of that volume coming from outside the United States. (For more, Click Here.)
There are some obstacles to the Mirafiori plan, however.
“The consensus of the unions and workers is indispensable to assure the necessary level of competitiveness,” Fiat said at a statement.
Marchionne recently asserted that Fiat is losing money on all its Italian operations because of the lack of productivity, and has said he will approve a $27 billion investment plan only if employees approve more efficient work rules. (Marchionne says Fiat would do better without Italy. Click Here for more.)
The Canadian-educated CEO, meanwhile, provided an early Thanksgiving treat for workers at its core Kokomo, Indiana transmission plan, announcing that Chrysler will spend $843 million to modernize the facility for future powertrain technology.
Since emerging from bankruptcy in May 2009, Chrysler has announced $3 billion in U.S. factory investments, more than a third of that now going to Kokomo.