Fiat Chrysler Automobiles (FCA) will produce two new gasoline engines at its plant in Bielsko-Biala, southern Poland in an investment it said was confirmation of its commitment to developing its operations in the country.
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Polish Deputy Prime Minister Mateusz Morawiecki told the PAP news agency that FCA could invest up to 250 million euros ($265 million) in the project and create several hundred new jobs.
FCA declined to comment on the number of jobs and gave no figures for the investment in the FCA Powertrain plant, where it will start making the 3-cylinder 1 liter engine and a 4-cylinder 1.3 liter one in 2018.
"These small but powerful units are characterized by the highest torque in their respective segments, low fuel consumption and lower CO2 emissions," FCA said, adding they would comply with existing and future EU emissions standards.
The plant currently makes the 1.3 Multijet turbo diesel engine and the 2-cylinder gasoline engine TwinAir.
While politicians and unions welcomed the investment, questions remain whether the world's seventh-largest carmaker will also add new models to its Tychy-based vehicle plant, which produces the popular Fiat 500 hatchback and the Lancia Ypsilon model, but has been running below capacity for years.
The facility used to be FCA's best performing plant in Europe, but was sidelined when it moved production of the Panda to Italy in 2011 to appease politicians eager to protect jobs.
The move led to hundreds of Tychy workers being laid off and the plant now makes around 260,000 vehicles a year, less than half its peak in 2009.
FCA Chief Executive Sergio Marchionne has repeatedly said the Polish plant was a "safe asset", although he is giving priority to boosting output at underutilized plants in Italy.
(Reporting by Agnieszka Flak and Wojciech Zurawski; Editing by Alexander Smith)