MICHIGAN, USA (AP) — Chrysler Group said Wednesday it will invest $300 million to update manufacturing facilities in Kokomo, Indiana, 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.

The investment will help retain 1,200 jobs at the facilities, Chrysler said.

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

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 overall fuel-economy by 25 per cent by 2014, she said.