Fiat Chrysler Automobiles (FCA) will spend almost EUR1bn (US$1.1bn) to start production of the new Alfa Romeo Tonale compact SUV and of the mild hybrid Panda at its Pomigliano plant, unions told Reuters.

The news agency said the investment was part of FCA's plan announced last year to spend EUR5bn in Italy up to 2021 to help group launch the group's first electric and hybrid models and to fill capacity utilisation at the Italian plants.

FCA would start building the new production line for the Tonale at the start of next year, metal mechanic unions FIM, UILM, FISMIC, UGLM and AQCF said in a statement sent to Reuters after meeting FCA.

A FCA spokesman confirmed the unions' statement to Reuters, adding the investment for the two models would be "closer to EUR1bn than EUR500m".

He said a "premium compact SUV" would be produced in the Pomigliano plant, near Naples in southern Italy, along with the hybrid Panda, but did not confirm it was the Alfa Tonale.

The company had already begun investing to prepare the plant for production. It already produces combustion engine Pandas.

The production of the mild hybrid Panda is expected to start in the first half of next year with the Tonale following in the first half of 2021.

Earlier this year, FCA said it was spending EUR700m to start building the production line for the new Fiat 500 electric in its historic Mirafiori plant in Turin, as the carmaker moved on from its failed $35 billion bid to merge with Renault.

Production will start in the second quarter of 2020.

Hybrid versions of the Jeep Compass and Renegade and the Maserati Levante are also expected to reach the market next year.

Meanwhile, FCA is dropping the Fiat 500 line in North America and ending production in Mexico.