To cut costs in ageing delivery van models, Fiat SpA  and PSA Peugeot Citroen has released its plans to invest more than EUR700 million (US$900 million) on new delivery van models over the next five years.

Fiat is expected to invest about EUR550 million, while Peugeot is expected to invest around EUR150 million in projects that improve the current versions of the Peugeot Boxer, Citroen Jumper, and full-sized Fiat Ducato models, Fiat said in a statement Tuesday. The new vehicle models are to be built at the carmakers' SevelSud plant in Italy.

"With the extension of the van partnership, we are relaunching a bet together with Peugeot. We have started the investment, including development costs for products and works to modernize the plant," Sergio Marchionne, Fiat Chief Executive Officer, said at a function in Val Di Sangro.

Fiat and Peugeot, which in 2011 arranged to conclude a similar partnership to make delivery vans in France, already cooperate at SevelSud on assembly of the models.