Nissan on Monday said it would invest $US300 million in a new plant in central Mexico to make advanced fuel-efficient transmissions, Reuters reported.

Nissan's transmissions unit Jatco said in a statement it would begin producing continuously variable transmissions (CVTs) from 2005 at the plant in the state of Aguascalientes, the report added, noting that the plant initially would produce 300,000 transmissions a year for the Mexican, US and Canadian markets.

"In the expectation of an expansion in future demand for CVT technology, it is anticipated that capacity will increase to more than 700,000 units in the future," Jatco, which is 82% owned by Nissan, said, according to Reuters.

The news agency noted that, unlike automatic transmissions, which shift between several fixed gear ratios, CVTs can change speed smoothly and cut fuel consumption by about 10% compared with vehicles using automatic gearboxes.

Reuters said that Nissan operates two plants in central Mexico, selling 60% of the cars produced there to the Mexican market.

On June 5, a source close to the deal told Reuters that Jatco would produce CVTs in Mexico but provided few details.

In a separate report, The Car Connection (TCC) website said that Nissan has agreed that it will supply Ford with CVTs for that company's future products, but it had not been confirmed that the Mexican CVTs will be headed for Ford vehicles as well as Nissans.