The plan is the first major initiative announced by Mr. Manley, who was named chief executive in July after his predecessor, Sergio Marchionne, died unexpectedly after shoulder surgery. Mr. Manley had headed the Jeep brand under Mr. Marchionne.
Fiat Chrysler intends to convert its Mack Avenue Engine plant in Detroit to produce a new seven-passenger Jeep model and the new version of its Jeep Grand Cherokee, a move that will add 3,850 jobs. Mr. Manley said construction would start in the second quarter. Plans for the plant’s conversion had surfaced in news reports in December.
The company will also update another Detroit plant, known as Jefferson North, to be able to make the next-generation Grand Cherokee as well as the Dodge Durango, another S.U.V., creating 1,000 additional jobs. A third plant in Warren, Mich., that currently makes an older version of the Ram 1500 pickup truck will be modified to also make two other new vehicles — the Jeep Wagoneer and Grand Wagoneer. That will bring 1,400 jobs to the Warren factory.
Mr. Manley said the plant modifications would allow Fiat Chrysler to start making electric versions of its Jeep models, if customer demand increased.
While the company is expanding in Michigan, it said it would lay off 1,371 of the 5,464 workers at its plant in Belvidere, Ill. The factory, where Fiat Chrysler makes Jeep Cherokees, employs three crews of workers, and runs two 10-hour shifts six days a week. The job cuts will take effect May 6, after which the plant will operate two eight-hour shifts five days a week.
A Fiat Chrysler spokeswoman said the carmaker had no plans to transfer Belvidere workers to the Michigan plants where jobs are being added.
Fiat Chrysler was ahead of most of its competitors when it stopped making sedans in 2016 to focus on pickups, S.U.V.s and other large vehicles, whose sales were rising as gasoline prices declined. G.M. and Ford are now scrambling to catch up.
G.M. announced last year that it would close two plants in the United States and a third in Canada that make cars. Ford said last year that it would stop making sedans, and is undergoing a broad restructuring to improve profitability. Both G.M. and Ford are eliminating thousands of salaried jobs as part of their cost-cutting efforts.