Chrysler plans to spend $843 million to build a nine-speed automatic transmission

Article by Christian Andrei, on May 11, 2011

Chrysler Group LLC expects to spend $843 million more for its transmission plant in Kokomo, Ind., to build a new, nine-speed automatic transmission for its front-wheel-drive vehicles. Chrysler made this announcement on the same day as General Motors Co.’s confirmation that it is making an investment of $2 billion in 17 facilities.

Of this amount, $204 million will be spent at a Toledo plant to build an eight-speed automatic transmission. GM aims to begin building the transmission by the end of 2011. However, Chrysler will begin to sell the Chrysler 300 and Dodge Charger with eight-speed transmissions in July.

Previously, Chrysler has revealed that it plans to invest $343 million at its Indiana Transmission Plants and Kokomo Casting to build the eight-speed. These facilities have 2,250 workers. On May 2, Chrysler Chief Financial Officer Richard Palmer said that its nine-speeds are expected to arrive by 2013.

This investment will become final as soon as the Kokomo City Council approves a tax abatement for Chrysler. In a statement, Chrysler CEO Sergio Marchionne said that Kokomo has long been at the center of its powertrain strategy.

The new Kokomo total of $1.1 billion represents Chrysler’s largest investment in one community in a single year. Chrysler exited bankruptcy and partnered with Fiat SpA in June 2009. Since then, Chrysler has invested nearly $3 billion in U.S. facilities. For the new transmissions, Chrysler has teamed up with German supplier ZF Group. Multi-speed transmissions boost fuel efficiency.

According to analyst Joe Phillippi of AutoTrends Consulting Inc. in Short Hills, N.J., Chrysler's image will be improved and will be brought upscale by putting a nine-speed in mainstream cars and minivans. Marchionne said that the new front-wheel drive transmission, together with its eight-speed transmission that will also be built in Kokomo, will transform its future products and make them leaders in the market.

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