Fiat-Chrysler to build 280,000 Fiat and Jeep small SUVs in Italy.

TURIN – Fiat-Chrysler plans to build up to 280,000 small SUVs a year in Italy for the Fiat and Jeep brands, sources say. Production will start in June 2014 with the as-yet-unnamed Jeep variant followed three months later by the Fiat 500X.

The planned annual volume for the Jeep is up to 150,000 units while Fiat's version will account for 130,000, two suppliers involved in the project told Automotive New Europe.

Fiat said last December that it would invest more than 1 billion euros ($1.3 billion) to add these small SUVs to its plant in Melfi, central Italy. The production plan is key to the automaker's bid to boost capacity usage and end losses in Europe by focusing on building higher-margin models.

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 by 2016 up from a planned 1.2 million this year.

Fiat-Chrysler CEO Sergio Marchionne believes that by using Fiat's Italian factories to export cars around the world the automaker's European operations will return to 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 automaker's Europewide production plan, which will use 15 percent of Fiat's capacity in Italy, Poland, Turkey and Serbia for exports, is expected to cost about 3 billion euros a year through 2014, according to a chart shown during a presentation on the automaker's Web site last December.

Hot segment

Fiat and Jeep will join the hot small SUV segment, which is forecast to grow to 500,000 sales in Europe by 2015, up from 154,461 last year, according to consultancy IHS Automotive.

In the first five months of this year, segment-leader Nissan sold 48,043 Jukes, up from 44,379 during the same period last year. Meanwhile the Opel/Vauxhall Mokka ranked second with sales of 32,342, according to market analysts JATO Dynamics.

IHS expects the recently launched Peugeot 2008 to quickly top the fast-growing segment, passing the Juke. Peugeot will double production of the 2008 in France to meet higher-than-expected demand, brand head Maxime Picat told the Automotive News Congress in Paris last month.

PSA/Peugeot-Citroen's plant in Mulhouse, eastern France, will make 10,000 units of the 2008 a month, up from 5,000. Picat said a second shift will begin producing the model in September.

The newly launched Renault Captur is expected to overtake both the Juke and the Mokka and rank No. 2 in the segment, according to IHS.

500X design revised

A styling model previewing Fiat's future small SUV was shown last year. That model has been revised to make it "more curvaceous and with some hints from the Juke," sources told Automotive New Europe.

Fiat's new SUV will join the 500's fast-growing portfolio. At about 4200mm (nearly 14 feet), the 500X fits between the 4150mm 500L five-seat small minivan and the 4350mm seven-seat 500L Living.

Fiat will offer 500X variants with either front-wheel or four-wheel drive. The new SUV will replace the Sedici, which Suzuki made for Fiat at its plant in Hungary until the end of last year.

The Jeep model, known internally as the B-SUV, looks like a baby Wrangler, a source said. It will be offered only as a four-wheel-drive model.

The 500X and baby Jeep will be sold in Europe, North America and Asia.

Both models will be underpinned by the Small Wide architecture that debuted last year on the 500L. The Small Wide is Fiat's first architecture conceived from day one to also comply with U.S. safety standards.

Jeep brand head Mike Manley said he believed the coming B-segment Jeep would lure customers in the United States and elsewhere away from sedans and hatchbacks. He said that he has set “very aggressive” sales goals for the vehicle as a result.

“If we get the right ride and handling and we get the right fuel economy -- and I’m convinced we will -- not only will we be competitive in what is the emerging B-SUV segment, you’re going to see hatchback and sedan buyers in B and C [segments] looking at that vehicle as a competitive alternative,” Manley said during an event near Detroit on June 28.

Larry Vellequette of Automotive News contributed to this report

You can reach Luca Ciferri at lciferri@crain.com.

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