Even as analysts are forecasting declines in auto sales in the United States this year and next, Fiat Chrysler Automobiles believes the time is still ripe for expansion.
On Tuesday, the Italian-American automaker said it planned to spend $4.5 billion over the next three years to update several Detroit plants and retool an engine plant to make Jeeps, an effort the company said would create about 6,500 new jobs.
While moving forward, it also took a step back, trimming operations at an Illinois plant and eliminating almost 1,400 jobs.
The other big American automakers, General Motors and Ford, have been cutting jobs and production. But Mike Manley, Fiat Chrysler’s chief executive, said he was confident that the American economy would remain on track.
“The economic indicators as we see them are still strong,” he said in a conference call with reporters.
He also noted that the updated plants would produce three large Jeep models — vehicles that are experiencing growth as consumers gravitate toward sport utility vehicles and increasingly abandon sedans. The plan, Mr. Manley said, “is an investment in Jeep as our core brand.”
The Jeep brand has benefited as American consumers have flocked to S.U.V.s and other roomier vehicles, and have turned away from sedans and compacts. In 2018, two-thirds of new vehicles sold nationwide were classified as trucks, up from half in 2013.
Overall new-vehicle sales in the United States are expected to be lower this year, and the pace of Jeep sales has slowed in the first two months of the year, leaving dealers with heavy inventories. As of Feb. 1, Fiat Chrysler had enough Jeeps on dealer lots to last 166 days, up from 116 on Jan. 1.
“I think there is some risk for FCA,” said Charles Chesbrough, a senior economist at Cox Automotive. “I don’t think people are expecting the market to collapse, but it is slowing down.”
The plan is the first major initiative announced by Mr. Manley, who was named chief executive in July after his predecessor, Sergio Marchionne, died unexpectedly after shoulder surgery. Mr. Manley had headed the Jeep brand under Mr. Marchionne.
Fiat Chrysler intends to convert its Mack Avenue Engine plant in Detroit to produce a new seven-passenger Jeep model and the new version of its Jeep Grand Cherokee, a move that will add 3,850 jobs. Mr. Manley said construction would start in the second quarter. Plans for the plant’s conversion had surfaced in news reports in December.
The company will also update another Detroit plant, known as Jefferson North, to be able to make the next-generation Grand Cherokee as well as the Dodge Durango, another S.U.V., creating 1,000 additional jobs. A third plant in Warren, Mich., that currently makes an older version of the Ram 1500 pickup truck will be modified to also make two other new vehicles — the Jeep Wagoneer and Grand Wagoneer. That will bring 1,400 jobs to the Warren factory.
Mr. Manley said the plant modifications would allow Fiat Chrysler to start making electric versions of its Jeep models, if customer demand increased.
While the company is expanding in Michigan, it said it would lay off 1,371 of the 5,464 workers at its plant in Belvidere, Ill. The factory, where Fiat Chrysler makes Jeep Cherokees, employs three crews of workers, and runs two 10-hour shifts six days a week. The job cuts will take effect May 6, after which the plant will operate two eight-hour shifts five days a week.
A Fiat Chrysler spokeswoman said the carmaker had no plans to transfer Belvidere workers to the Michigan plants where jobs are being added.
Fiat Chrysler was ahead of most of its competitors when it stopped making sedans in 2016 to focus on pickups, S.U.V.s and other large vehicles, whose sales were rising as gasoline prices declined. G.M. and Ford are now scrambling to catch up.
G.M. announced last year that it would close two plants in the United States and a third in Canada that make cars. Ford said last year that it would stop making sedans, and is undergoing a broad restructuring to improve profitability. Both G.M. and Ford are eliminating thousands of salaried jobs as part of their cost-cutting efforts.
