Fiat Chrysler to spend 5 billion euros on new models, engines in Italy

TURIN, Italy (Reuters) - Fiat Chrysler pledged on Thursday to spend more than 5 billion euros ($5.7 billion) on new models and engines in Italy over the next three years to try to make better use of factories and boost operating margins in Europe.

The plans are intended to deliver on a strategy outlined by FCA's late boss Sergio Marchionne in June, in which he vowed to keep converting Italian plants to churn out higher margin Alfa Romeos, Jeeps and Maseratis and hybrid and electric versions of its vehicles to protect jobs and lift profitability.

A total of 13 new models or restylings of existing models will be launched in the 2019-2021 period and ensure that all plants in Italy reach full employment, FCA's new European head Pietro Gorlier said on Thursday.

FCA appointed Gorlier last month to tackle a region where profitability is below that of rivals, thousands of workers are on temporary layoff schemes, and some plants run way below capacity.

A big part of the investments will be focused on the development of electric and hybrid engines, the carmaker said.

A new Fiat 500 electric model will be produced at FCA's Mirafiori plant in Turin, while its plant in Pomigliano, southern Italy, will churn out a mild-hybrid version of its popular Fiat Panda hatchback.

Pomigliano will also produce a new compact utility vehicle from the Alfa Romeo stable, while Melfi, which already produces the Jeep Renegade, will also make the Jeep Compass.

Gorlier added that a previously announced target to discontinue production of diesel passenger cars in Europe by 2021 was "too aggressive" and the company would keep producing diesel models beyond that date, but confirmed that the overall trend towards a gradual shift away from diesel remained.

(Reporting by Agnieszka Flak and Gianni Montani)