concessions from Fiat's unions to make the plant competitive, especially compared to plants in Eastern Europe.

"This is an extraordinary opportunity for Italian industry to produce cars of quality and prestige," says Marchionne. "Mirafiori has all the elements necessary to achieve a leap of quality and become a world-class plant, producing cars for Europe, North America, and other markets around the world."

Marchionne also noted that this project is the first tangible example of the benefits brought by the Chrysler alliance to Italian operations. It is significant that such a development should take place at Mirafiori, he said, as the city is the symbol of Italy's industrial and automotive culture.

The announcement is a clear indication that Marchionne is working quickly to align the future product plans for Alfa Romeo and Jeep--in much the same way he has already done with Lancia and Chrysler.

The vehicles planned for production in Fiat's Mirafiori plant will be based on Fiat's flexible "Compact Wide" (known internally as C-wide) architecture. The C-wide platform is currently used on the recently introduced Alfa Romeo Giulietta sedan; it will also underpin an upcoming Dodge model to be built in North America. One version promises to deliver 40 miles per gallon, one of the conditions for Fiat to expand its ownership of Chrysler by another 5 percent.

(The other two requirements are building Fiat's 1.4-liter engine in Dundee, Michigan--for use initially in the Fiat 500 built in Mexico--and expanding Chrysler's North American vehicle exports, which could raise Fiat's stake in Chrysler to 35 percent by mid-2013.)

The Mirafiori plant is slated to build a number of models based on Fiat's C-wide architecture, including a crossover SUV intended to replace the Compass/Patriot in the current Jeep-model hierarchy. This move was broadly hinted at when Chrysler laid out its five-year plan to the media in December 2009.