(This story has been updated.)
Fiat Chrysler Automobiles plans for a sweeping overhaul of its North American operations took another step forward with the announcement that the company will invest more than $1 billion to retool assembly plants in Illinois and Ohio.
The retooling investment supports the future growth of the Jeep brand and creates 1,000 new jobs, the company said in its announcement, which also underscores the urgency behind FCA CEO Sergio Marchionne’s plans to build more Jeeps.
At the same time, FCA U.S. is pushing ahead with a broad strategy to expand the company’s line of trucks and utility vehicles while relegating passenger car production to a secondary position.
The Belvidere Assembly plant in Belvidere, Illinois, west of Chicago, will receive an investment of $350 million to produce the Jeep Cherokee, which will move from its current production location in Toledo, Ohio, in 2017. Approximately 300 new jobs will be created.
Production of the Dodge Dart, which is now built at FCA’s assembly plant at Belvidere, and the Jeep Compass/Jeep Patriot will end in September 2016 and December 2016, respectively.
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Production of the Compass/Patriot are being moved to Mexico while the fate of the Dart has been left in limbo as the Illinois-based plant is re-tooled to build a new generation of pickup trucks.
FCA also said it plans to invest $700 million to retool the Toledo Assembly Complex. According to the company’s plans, the Toledo North plant will produce the next generation Jeep Wrangler for global distribution.
Approximately 700 new jobs will be added. An announcement regarding the future of the South plant will be made at a later date, FCA officials said. However, the new Wrangler is now expected to begin production in 2018. The Toledo complex is also expected to build a compact pickup truck based on the Wrangler, which has been all but confirmed officially by the company’s top executives.
These production actions are subject to the formal approval of incentives by state and local entities.
Marchionne said back in January that he planned to overhaul the company’s production capacity to follow the current market trends and build more truck and utility vehicles.
During the first half of 2016, truck and utility vehicles accounted for 57.8% of the vehicles sold in the United States during the first half of 2016, compared to 53.8% in the first six months of 2015, according to Auto Data.
Some 72.2% of the vehicles sold by FCA were trucks and utility vehicles, compared with 66% in first half of 2015, according to the company’s own sales numbers.
Marchionne is also pushing ahead with a raid expansion of the Jeep brand, which is expected to set another sales record this year as it expands into new markets and new market segments.
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Mike Manley, president of chief executive officer in charge of Jeep, recently told reporters.
Jeep is on the verge of launching several new vehicles that will bolster sales. The new vehicles include the replacement for the car-like Jeep Compass and Patriot, the new Jeep Cherokee, which will be built in Belvidere, and the Jeep Wrangler, which will be built in Toledo and which has been redesigned to help it match up with federal fuel economy regulations.
Compass and Patriot will be unveiled for the first time in Brazil this fall. It will also appear at the Los Angeles Auto Show in November, he said.
Manley also said he believes there is ample room in the market for B-Class size Jeep smaller than the Renegade, which is now the smallest vehicle in the Jeep model line.
“I have a strong feeling a small Jeep below Renegade would do well outside of (North America),” said Manley, who has been responsible for pushing the Jeep brand into new markets in Europe, Asia and now South America. “I would never say it would never be sold here,” he said, adding the first targets would be markets where small, subcompact vehicles have a strong presence.
Much of the growth in utility vehicle sales in recent months have been in the smaller segments. Sales of midsized and full-sized sport utility vehicles have been flat for the most part, he noted.
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At the other end of the Jeep portfolio, Manley said he believes Jeep could sell multiple versions of the Jeep Wagoneer, which he described as the “ultimate” Jeep vehicle. However, both the Wagoneer and Grand Wagoneer would be premium vehicles and feature different trim levels, powertrains and technology, added Manley, who noted later on during his conversation that FCA was taking a serious look at bringing electric vehicles into the Jeep line.