Car Buyer's Notebook

The new vehicles will have the company's new, more fuel-efficient V-6 Phoenix engine and a more advanced suspension. They also will feature many common components designed jointly with Mercedes-Benz. Chrysler is still partly owned by Mercedes parent, Daimler AG.

The project includes a 285,000-square-foot expansion of the 2.7-million-square-foot plant, which was built in 1991, including a new body shop. The retooled factory will feature several environmental advances, from state-of-the-art lighting and energy management to using solid waste and paint sludge as a source of energy. It will be flexible enough to build different vehicles to better meet changing consumer demand.

"It allows us to do different products, including much smaller products as well as bigger," LaSorda said. Chrysler, like its Detroit rivals Ford Motor Co. and General Motors Corp., is scrambling to add smaller vehicles to its lineup, which has been dominated by trucks, as high gas prices drive demand for more fuel-efficient cars and car-based SUVs, known as crossovers.

Gerald Meyers, a former chairman of American Motors Corp. and business professor at the University of Michigan, said the decision to build a new generation to replace the Grand Cherokee was overdue, but not without risks. "It's a very expensive bet to produce a new line of larger fuel-efficient vehicles, rather than smaller fuel-efficient vehicles," he said, noting the high costs of retooling.

Chrysler agreed to build the next-generation Grand Cherokee at the plant last fall in labor talks with the United Auto Workers.

"We are pleased to partner with Chrysler to help maintain jobs in Michigan," said General Holiefield, UAW vice president and director of the union's Chrysler department.

News of the investment in Detroit and the new products was the latest indication of where Chrysler is going with plans to revamp its lineup. LaSorda said the automaker continues to pursue alliances and partnerships with other companies, and hopes to secure deals in Russia, India and China this year.

"For Chrysler to become more global and offer a broader product mix, they are going to have to go the alliance route," said Erich Merkle, an automotive consultant with Crowe Chizek & Co. "Otherwise it is going to take far too much time to develop that expertise internally."

David Cole, chairman of the Center for Automotive Research, said Chrysler doesn't have the size to produce vehicles worldwide and pay for all of the costs.

Unlike Ford and GM, which are bringing their European vehicles to the United States, Chrysler must look to partners for smaller vehicles.

Chrysler already has announced plans to work with Nissan Motor Co., the Japanese company providing it with two small cars, including a version of its Versa to be sold in South America and another small car to be built by Nissan in Japan and sold by Chrysler worldwide. Chrysler is providing Nissan with a pickup.

Chrysler plans to start selling the Chrysler-designed, Nissan-built small car in late 2010. "We've pretty much finalized the design of the product," LaSorda said. A name has been chosen for the vehicle but he declined to share it.

He said Chrysler and Nissan have no plans to expand their partnership, denying a report that they would collaborate on a midsize car. "We said we'd keep open dialogue but I think we're busy right now."

He also confirmed that Fiat had approached Chrysler about using Chrysler's excess factory capacity. "At this stage there is no formal discussion going on, but there was an inquiry."

A plan to sell small cars built by China's Chery Automobile Co. in Central and South America was delayed "because it did not meet our standards," LaSorda said. It may be ready by year's end, "but we're not going to put any nameplate on it until we can be assured it meets all of our standards."

Chrysler, like GM and Ford, has been battered by plummeting U.S. sales amid a weak economy and the market shift away from the trucks they have long relied on for profits. But LaSorda dismissed speculation that Chrysler owner, Cerberus Capital Management LP, might try to sell it because of the financial pressure.

"We'll be there and we're going to be there long term," he said. "We're going to rebound. It's just a question of time. Bottom line is they are holding on for the long term and we'll see what happens."

Chrysler, like its crosstown rivals, also is struggling because of the tight credit market, though it says it is meeting its financial targets. Still, LaSorda would welcome help in the way of federal government loan guarantees.

Congress could add those guarantees to a new stimulus package in September, something that could make retooling Jefferson North more affordable.

"It's not free," LaSorda said. "You have to pay it all back. ... We're hoping they do it."