The Fiat-Chrysler alliance plans to build a new plant in Guangzhou, China, to produce Jeep SUVs, according to the official Xinhua news agency.
The new plant will produce 160,000 vehicles a year after a spend of about US$774m, said the report.
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A framework agreement was announced in January this year although there were reports during the summer that Fiat-Chrysler disagreed with Guangzhou over the preferred plant location.
Fiat has a 50-50 joint venture plant in Changsha with Guangzhou Auto where it can produce 140,000 vehicles.
In China, final agreements are the last step and require government approval.
Chrysler and Fiat CEO Sergio Marchionne has set Jeep a goal to sell 800,000 vehicles annually by 2014. Analysts say the brand is most likely to produce the Cherokee in China. It showed the model at the Shanghai motor show in April.
