Market Overview

Fiat Chrysler To Revive Old Assembly Plant In Detroit

Fiat Chrysler To Revive Old Assembly Plant In Detroit

While the rest of the U.S. auto industry continues consolidating plants, closing factories and shifting production abroad, the emboldened Fiat Chrysler Automobiles NV (NYSE: FCAU) is pursuing an alternative route.

What Happened

FCA plans to open the Big Three’s first new domestic assembly plant in more than a decade, according to the Wall Street Journal. Based in Detroit, the now-idled Mack Avenue Engine II and Jefferson North Assembly Plant will support the Jeep brand with Grand Cherokee production, the Detroit News wrote.

Why It’s Important

The plant renovation is a critical opportunity for Detroit — another catalyst for the city’s revitalization — but it’s also important for FCA.

To start, the plan will undoubtedly win points with lawmakers, who chastised General Motors Company (NYSE: GM) CEO Mary Barra for shuttering plants in Ohio and Michigan and laying off thousands of workers.

It will also enhance FCA’s capacity to double down on trucks and SUVs. The Italian-American automaker was the first in the U.S. to turn sharply from passenger vehicles, and its leading brand in the segment, Jeep, has consistently boasted monthly gains.

Finally, FCA’s plan testifies to a new strategy for the nation’s fourth-best seller. Newly appointed CEO Michael Manley appears more aggressive on brick-and-mortar expansion than was his predecessor, Sergio Marchionne. The new leader demonstrates responsiveness to FCA’s rising demand and capacity-exceeding growth.

What’s Next

The Mack Avenue plant will begin production in time for the 2021 model of the Jeep Grand Cherokee, and the Jefferson North factory will begin retooling at that time.

A company announcement is expected at the end of next week.

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