ROME, Dec 17 (Reuters) -

Stellantis ( STLA ) will keep all of its Italian factories

open and increase output from 2026 thanks to the launch of new

models, the head of the carmaker's European operations said on

Tuesday.

Italian Industry Minister Adolfo Urso also pledged that

Italy would spend more than 1 billion euros ($1.05 billion) next

year to support its struggling automotive sector, drawing a line

under months of fraught relations with Fiat-maker Stellantis ( STLA ).

Urso was hosting a meeting in Rome with representatives

of Stellantis ( STLA ), suppliers and trade unions to seal a deal to

revive Italian automotive production.

Stellantis ( STLA ) will produce at least two compact models at

its Italian plant of Pomigliano in southern Italy, where the

automaker will introduce its new 'STLA Small' platform from

2028, the chief of the firm's European operations told the

meeting.

Jean-Philippe Imparato also said the Jeep Compass,

Lancia Gamma and DS7 -- three mid-sized models scheduled to

start production at the southern Italian plant of Melfi from

2025 -- will be made in both fully electric and hybrid versions.

The mood between Stellantis ( STLA ), the parent company of Fiat

and Alfa Romeo, and Italy's right-wing government has

rapidly improved

following this month's abrupt resignation of Stellantis ( STLA ) CEO

Carlos Tavares.

Italian politicians repeatedly accused Tavares of

neglecting historic manufacturing sites in the country and

moving production of new Fiat and Alfa Romeo models abroad.

Stellantis ( STLA ) is the sole major automaker in Italy, where

it employs around 40,000 people.

Automotive output in Italy -- of both passenger cars and

vans -- is

expected to fall

below 500,000 vehicles this year, according to estimates of

FIM-Cisl union, from 751,000 in 2023.

($1 = 0.9517 euros)