Chrysler Group is moving production of its popular Chrysler 300 right-hand-drive sedan to Brampton, ON, Canada, from overseas to fill additional capacity it promised the Canadian Auto Workers union when members took a pay cut to win the now-defunct Imperial.

CAW President Buzz Hargrove confirms the plan, which Chrysler officials announced in July.

The added capacity will arrive in Brampton after the auto maker's contract with coachbuilder Magna Steyr to build right-hand drive and diesel versions of the 300 in Graz, Austria, expires in 2010, Hargrove says.

Given the retooling necessary to accommodate right-hand drive and diesel production, Chrysler will increase its previous investment in Brampton to $1.2 billion from $700 million, Hargrove says.

Chrysler struck a deal earlier this year with the union on wage concessions in return for the Imperial investment.

But the auto maker now says rising fuel prices, a shift in consumer preference to smaller vehicles from larger models, plus plans by lawmakers in Washington to raise corporate average fuel economy standards, leaves it no choice but to nix Imperial production.

“We were not able to develop a business case for (the) Imperial, although we were trying,” says a Chrysler spokesman.