MILAN — Fiat and Chrysler CEO Sergio Marchionne on Friday proposed a joint venture with Chrysler to build Alfa Romeo and Jeep brand vehicles at Turin's Mirafiori auto plant.
The proposal to produce Jeep and Alfa Romeos for the European and export markets is the first significant step toward integration in Europe between the Italian and U.S. automakers since Fiat took control of Chrysler with a 20 percent stake in June 2009.
In the U.S., Fiat has launched the iconic, subcompact 500 and has started to build engines with Fiat technology at U.S. plants.
Marchionne made the proposal during a meeting with unions in Turin, part of his efforts to reach more flexible work agreements at Italy's plants as a condition to $26.64 billion in investments planned for Italy.
Fiat said in a statement that Fiat and Chrysler would invest in the Mirafiori plant, proportional to the volumes produced by each brand.
Under the plan, Mirafiori would produce up to 280,000 cars a year by 2012, compared with 178,000 last year, more than half for export, especially to North America, Fiat said.
"The consensus of the unions and workers is indispensable to assure the necessary level of competitiveness," Fiat said in a statement.
Fiat is seeking more flexibility in production and work rules.
The plan would help Fiat reach a milestone to raise its share of Chrysler by providing a way to improve Chrysler sales internationally.
Fiat received a 20 percent stake of Chrysler in exchange for clean-burning engine and small-car technology lacking at Chrysler, as well as management prowess.
It can raise its stake to 35 percent in 5 percent increments by meeting defined targets, including the introduction of more efficient engine technology, which it is achieving through the launch of the 500, and improving Chrysler sales abroad.
Mirafiori produces Fiat branded Punto, Idea and Multipla vehicles, the Lanca Musa and the Alfa Romeo Mito.
Fiat has already announced replacements for the Idea and the Musa will be built in Serbia, while the Multipla is being phased out.
Mirafiori employs 5,800 workers, a number which could increase.