Fiat-Chrysler CEO Sergio Marchionne has ended months of speculation by confirming this week that production of the upcoming 500X crossover, as well as a planned Jeep variant, will take place at the company’s plant in Melfi, Italy.

Preparing the plant for the production of the two new vehicles will cost approximately $1.3 billion. The first cars are expected to roll off the line in 2014, with exports to U.S. also expected to start that same year.

The decision to produce both vehicles in Melfi was partially made to appease the Italian government by helping shore up production at some of Fiat’s underutilized Italian plants instead of closing them.

Many of Fiat’s plants in Italy are running at 50 percent or lower than their optimal capacity, and with many, including Marchionne, seeing no rebound in the European new car market until at least 2015, either these plants start building cars for export or they cease to operate.

In Europe, the 500X will serve as the replacement for the aging Fiat Sedici but in the U.S. it will be the latest entry in the burgeoning compact crossover market.

It’s said to be more spacious than the recently revealed 500L MPV.

Few details are known about the Jeep variant, but to differentiate it from its Fiat cousin Jeep is expected to make the vehicle trail-rated and pack it with more premium features. Marchionne has stated that a name for the new Jeep is yet to be picked.

Despite production of this new Jeep taking place in Italy, there will be no job losses back in the U.S.


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