(June 10, 2010) Chrysler plans to spend $300 million to build a new eight-speed automatic transmission licensed from ZF Group, a transmission maker headquartered in Friedrichshafen, Germany.

Automotive News reports that the investment will pay for installation of special tooling and equipment at a Chrysler transmission plant and a casting plant in Indiana.

It will help retain 1,200 jobs there, Chrysler said. Production will start in 2013.

Meanwhile, Chrysler said it plans to import the transmissions from Germany before production ramps up in Kokomo. Spokesman Nick Cappa said he could not say when the imports would begin.

Chrysler says that the transmission would contribute to a 25 percent reduction in fuel economy by 2014.

The company did not say which vehicles the transmission would be used in, but it is already being used in rear-drive vehicles made by BMW. Chrysler could use it in the Chrysler 300, Dodge Charger and Jeep Grand Cherokee along with Ram pickups.