Marchionne to outline plans to build Jeeps, Fiat SUVs in Italy, report says

MILAN/ROME (Bloomberg) -- Fiat CEO Sergio Marchionne will soon give details of his plans for the production of Fiat and Jeep SUV models at the automaker's factory in Melfi, southern Italy, sources said.

Fiat will go ahead with the projects even with possible political instability in Italy after the country's Prime Minister, Mario Monti, announced his intention last weekend to resign, three people with direct knowledge of the matter said.

Marchionne will probably give details then on the initial spending at the Melfi plant as early as next week, said the people, who asked not to be identified because the plans have not been revealed yet.

Fiat plans to build the 500X, a replacement for the current Fiat Sedici small crossover at Melfi alongside a "baby" Jeep Wrangler for European and U.S. markets, according to Automotive News Europe sources.

Marchionne plans to boost sales of more expensive models to turn around Fiat's European operations, which are forecast to post 700 million euros ($913 million) in losses this year and led the manufacturer to cut its 2014 trading-profit goal by 31 percent to 5.2 billion euros.

The CEO intends to introduce 19 models through 2016 that will be produced in Italy, including nine Alfa Romeo-badged vehicles and six Maseratis.

Of the new vehicles, 15 will be made for both export outside the region and sale in Europe. Fiat and Chrysler plan to invest as much as 18 billion euros in the next two years, mainly to develop new models in Europe, according to an Oct. 30 investor presentation.

Fiat predicts it will break even in Europe in 2015 at the earliest as it adopts the higher-priced vehicle strategy.

"Marchionne is doing well in taking this opportunity, and his focus on the high-end market segment goes in the right direction," said Carlo Scarpa, professor of industrial economy at the University of Brescia. "A new government wouldn't make a big difference and, in the medium term, the economic trend should be positive."

Fiat stock has gained 1.1 percent this year, valuing the company at 4.49 billion euros.

Fiat said Dec. 7 that it plans to eliminate 1,500 jobs in Poland to reduce production as the European auto market is on track to hit a 17-year low in 2012.

The carmaker, which last year moved production of the new Panda model from Poland to its home market, doesn't plan to cut more jobs in Italy after shutting a plant on the island of Sicily in 2011.

Luca Ciferri contributed to this report