(Reuters) - Chrysler Group LLC FIA.MI is expected to build the industry's first nine-speed automatic transmission in late 2013 at a plant north of Indianapolis if it wins final approval of a 10-year tax break from local authorities, according to a source familiar with the company's plans.
The automaker on Monday received preliminary approval of the tax abatement from Tipton County, Indiana. Chrysler has said it plans to invest $162 million in a transmission plant there if the Tipton City Council finalizes the tax deal on Tuesday.
Another tax abatement is being sought by Chrysler at the city council in Kokomo, Indiana, where the automaker has four transmission plants. Chrysler would not offer figures for the tax abatement in Kokomo, which goes before its council on Monday night.
Chrysler has announced a $1.3 billion investment to upgrade its Kokomo transmission plants to meet demand for transmissions in its vehicles. Chrysler's U.S. vehicle sales through November were up 20 percent to 1.46 million.
Chrysler is ramping up production of its transmissions in Indiana, and has said it was preparing for production of a nine-speed automatic transmission at one of the Indiana plants.
An industry first, the nine-speed transmission will be used on a variety of front-wheel-drive vehicles, including the Dodge Dart and the next-generation Chrysler 200, the company has said.
The plant in Tipton County is about 15 to 20 miles from the automaker's Kokomo plants.
Tipton County officials said the tax break is for a plant outside Tipton that has been standing vacant for more than four years. The building was constructed to house a transmission plant to be operated jointly by Chrysler and Germany's Getrag Transmission.
The plant never opened. After Chrysler went into bankruptcy in 2009, ownership of the facility shifted to a trust of building contractors. It was purchased by Boulder, Colorado, real estate firm W.W. Reynolds, which has it on the market for $39.5 million, said Linda Williamson, economic development director for Tipton County.
Chrysler said on Monday it has not made a final decision on the Tipton County project.
"While we appreciate their support, there are several more steps that need to be completed before we can fully confirm our plans for Tipton," said Chrysler in a statement.
(Reporting By Bernie Woodall; Editing by M.D. Golan)