Chrysler announced today that it plans to invest US$1.7 billion for the development and production of the next Jeep SUV, including a $500 million investment at its assembly plant in Toledo, Ohio, where the new model will be manufactured not just for the U.S., but also for export to all global markets.

The plant will be updated with an additional 260,000 square feet added to its body shop, a new quality lab and improvements to its paint shop and material handling facilities.

The Detroit-based carmaker will also add a 26,000-square-foot metrology center to improve fit and finish of the cars and plans to introduce a second shift in late 2013, creating more than 1,100 new jobs in the process.

According to a report from Automotive News, Chrysler CEO Sergio Marchionne said during his visit to the factory that the new SUV will replace the current Liberty (Cherokee in overseas markets) with a model that will be “superior” in technology to anything Jeep has today – including the Grand Cherokee.

Marchionne was also highly critical of the Nitro, saying, “This car should never have been built”. Production of the short-lived Liberty-based Dodge SUV, which was introduced in 2006 and revamped in 2010, will cease in December.

Despite the factory’s 327,000 vehicle maximum annual capacity, just 91,973 Liberty and Nitro SUVs rolled out of its production line in 2010, a 61% drop from the 2003 all-time high of 237,719 units.

The Liberty replacement will be introduced for the 2013 model year. It will be the first Jeep model to be based on Fiat’s CUSW platform, which is scheduled to underpin as many as eight compact and mid-sized models for the North American market.

Story References: Chrysler and Autonews