Chrysler has announced plans to invest $1.8bn (£964m) in new vehicle projects and plans to expand plant in Detroit.
Expanding the Jefferson North plant will allow more flexibility and higher output, said the firm.
The expansion will also create 400 jobs, said Chrysler's president Tom LaSorda during a car event in Michigan.
The news comes as the car manufacturer has embarked on cost cutting plans, by reducing the workforce and capacity to offset a slump in sales.
"This investment enables us to produce a new generation of world-class vehicles that meet the demand of our consumers around the globe," said Mr LaSorda.
The plant currently produces the most popular model in Chrysler's line-up, the Jeep Grand Cherokee - but demand has been hit by high petrol prices.
Chrysler, Ford and GM have all been hit by falling demand for their vehicles - especially larger gas-guzzling models.
Consumers have been switching to more fuel-efficient models as the price of oil has risen sharply.
In particular, sales of minivans, trucks and sports utility vehicles have all dropped significantly.
Mr LaSorda also said the car firm has singled out $1bn in non-essential assets that the firm would be able to sell.
Chrysler was bought by private equity firm Cerberus after Daimler decided to walk away from its huge investment in 2006.
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