"In Mexico, we have installed 120,000 units of annual capacity for the 500, half of which will go to North America, the other half to Brazil and China," Marchionne said on the sidelines of the Detroit auto show.

Laura Soave, CEO of the Fiat brand for North America, said production of the 500 began this month at Chrysler Group's assembly plant in Toluca, Mexico.

The retro-styled 500 was introduced in Europe in 2007 and is the region's second best-selling mini-car after the Fiat Panda.

While the 500 will generate additional sales for Fiat in China, the real boost will come when Fiat's 50:50 joint venture with Guangzhou Automobile Industry Group launches production in the second half of 2011.

The venture's plant, which is located in the city of Changsha in central China, initially will produce 140,000 cars and 220,000 engines annually.

The first model to be built will be the Fiat Linea compact sedan.