Chrysler invests $300 million in Ind. plant to build 8-speed transmissions for future vehicles

Chrysler spends $300M to build new transmissions

AUBURN HILLS, Mich. — Chrysler Group LLC said Wednesday it will invest $300 million to update manufacturing facilities in Kokomo, Ind., where it will build new eight-speed transmissions with a German auto parts maker starting in 2013.

The automaker said the new transmissions will be more fuel-efficient than the traditional five- and six-speed transmissions that are currently standard in Chrysler’s vehicles.

As part of the investment, Chrysler has licensed technology and manufacturing rights from ZF Group, a German auto parts manufacturer that also makes components for BMW, Mercedes-Benz and Audi.

Chrysler said the $300 million will be used to modernize and install new tooling and its Indiana Transmission Plant I and its Kokomo Casting Plant, both located in Kokomo.

The investment will help retain 1,200 jobs at the facilities, Chrysler said. It said the investment is the company’s largest in the U.S. since it exited bankruptcy protection last June, and was made possible by the approval of a tax abatement from Kokomo.

“The new eight-speed transmission that we’ll be producing in Kokomo will transform our future product line, but equally important, ensures the future viability of our Kokomo facilities and our dedicated work force,” said Scott Garberding, Chrysler senior vice president and head of manufacturing, in a statement.

The infusion of money at the Kokomo facility is the latest piece of good news for Chrysler’s operations there. Last month, the automaker announced it was rehiring almost 400 laid-off workers and investing $43 million to build transmissions at its Kokomo operations.

Chrysler spokeswoman Jodi Tinson declined to say what models the new transmissions would be used in or if vehicles equipped with the transmissions would carry a premium. The new transmissions will contribute to a companywide goal of improving Chrysler’s average fleet-wide fuel economy by 25 percent by 2014, she said.