Chrysler Group, which is betting on high-tech transmissions as a way to improve fuel economy for traditional gasoline engines, will invest $374 million in several Indiana plants responsible for building eight- and nine-speed gearboxes.
After months of preliminary steps, Chrysler said it will invest $162 million in an empty Tipton, Ind., plant to build nine-speed automatics for front-wheel-drive vehicles. Up to 850 jobs could be created at the plant, which is scheduled to begin production in the first quarter of 2014.
Chrysler also will spend $212 million for equipment and tooling for the Kokomo Transmission, Kokomo Casting and Indiana Transmission I plants, and will create as many as 400 jobs at those plants.
"This is the sole region where we manufacture transmissions, and including all of the nearby facilities, it will be the largest transmission installation in the world," CEO Sergio Marchionne told workers last week at one of the plants.
Marchionne expects to meet regulatory requirements for increased fuel efficiency primarily by improving traditional gasoline engines with the better transmissions. The strategy requires less investment than developing gasoline-electric hybrid vehicles, he said.
"With more gears, these transmissions can run more often in their optimal speed ranges, providing both better fuel economy and vehicle performance," Marchionne said.
Chrysler plans to put the nine-speed transmission in the Jeep Cherokee SUV and in the Dodge Dart, the Associated Press reported.
Production at the Tipton plant, which is located 20 miles south of Kokomo, is expected to begin in the first quarter of 2014, the company said. In December, the Tipton County Council approved a 10-year tax abatement worth $2.5 million, according to the Kokomo Tribune.
Chrysler and German supplier Getrag originally intended to make dual-clutch transmissions for Chrysler vehicles at the Tipton plant, but the venture fell apart in late 2008.
After the joint venture dissolved, Abound Solar Inc. of Loveland, Colo., made plans to build solar panels at the plant. But increased foreign competition in that industry caused Abound Solar to abandon its plans this year.
Bloomberg and Larry P. Vellequette contributed to this report