April 8, 2015 / 5:38 PM / 2 years ago

Fiat Chrysler to invest $540 million in new engines for Alfa Romeo

An Alfa Romeo logo is seen on a car displayed on media day at the Paris Mondial de l'Automobile, October 2, 2014.Benoit Tessier

MILAN (Reuters) - Fiat Chrysler Automobiles (FCHA.MI) will invest more than 500 million euros ($540 million) to produce two new engines for its Alfa Romeo cars as part of a planned relaunch of the brand, the car group said on Wednesday.

Alfa Romeo is a core part of Fiat Chrysler's ambitious five-year 48 billion-euro turnaround plan.

The carmaker plans to invest 5 billion euros in Alfa Romeo to boost sales more than fivefold to 400,000 vehicles in 2018 by adding eight new models and ramping up production.

The engines, to be produced at the group's Termoli factory in southern Italy, include an advanced high output four-cylinder engine developed for Alfa Romeo, the company said.

The second product will be a Ferrari-derived six-cylinder engine developed specifically for Alfa Romeo.

Fiat bought Alfa from state holding company IRI in 1986, but several attempts at reviving the brand have stalled, leaving just three models. Only 74,000 Alfa Romeos were sold in 2013.

Fiat Chrysler's chief executive, Sergio Marchionne, has said he would keep production of Alfa Romeos in Italy to fill under-utilized plants, protect jobs and vindicate his belief that "Italians know how to build great cars".

The first new Alfa Romeo model is due to be unveiled in June.

($1 = 0.9243 euros)

Reporting by Agnieszka Flak; Writing by Stephen Jewkes; Editing by Greg Mahlich

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