MILAN (Bloomberg) -- Fiat S.p.A. will start building Maserati's first SUV in Turin by the end of next year as part of a strategy to add upscale models in Italy and end losses in Europe.
The Italian carmaker, which controls Chrysler Group LLC, will extend layoffs for 5,300 workers to retool the Mirafiori plant for the Levante SUV, Fismic union leader Roberto Di Maulo said in a phone interview. A second model will follow, he said.
Fiat will invest slightly less than 1 billion euros ($1.32 billion) at Mirafiori, Uilm union chief Eros Panicali said.
The Italian carmaker, which closed a plant in Sicily in 2011, has focused on layoffs rather than job cuts in response to a decline in Europe's car market that is forecast to extend to six years in 2013. In a bid to rehire all its Italian workers by 2016, Fiat plans to add upscale models from Maserati and Alfa Romeo to fill under-used factories.
"Boosting production of upscale models in Italy is the right strategy," said Giuliano Noci, a marketing professor at Milan Polytechnic. "The Maserati SUV has great potential and a 'made in Italy' label will increase its appeal among wealthy buyers."
The automaker will "immediately" start investments at the factory in exchange for prolonged layoffs, the company said in a statement without elaborating on the production plan.
Bolstering Maserati's global appeal is key to Marchionne's effort to end losses in Europe, which totaled more than 700 million euros last year. Fiat is counting on overseas demand for higher-margin luxury cars to keep workers at under-used Italian factories busy.
Fiat will roll out the Ferrari-powered Maserati Ghibli and start deliveries of the new Alfa Romeo 4C sports car this year as part of a plan to build eight new Alfas and six Maseratis in Italy by 2016.
The automaker plans with Alfa Romeo and Maserati to target the dominance of BMW AG, Volkswagen AG's Audi and Daimler AG's Mercedes-Benz in the luxury-car segment.
The Levante SUV, which will derive from the Kubang concept shown at the Frankfurt car show in 2011, is crucial to help Maserati boost deliveries eightfold to 50,000 cars in 2015.
While investing in upscale vehicles, Marchionne has scaled back spending on new mainstream models for Europe. Fiat narrowed its first-half operating loss in the region by 48 percent to 185 million euros by cutting costs and reducing spending on developing new cars.
Fiat will extend furloughs for workers at Mirafiori, the automaker's oldest and largest factory, for most of the next year while the retooling takes place after an existing agreement expires at the end of this month.
"The era of uncertainty over the future of Mirafiori is finally finished," Di Maulo said.