Skoda has won an internal Volkswagen Group tender to produce a range of transmissions for a new small family car.

Skoda will spend around CZK1.5bn (GBP49m) to expand its existing production facility at Mlada Boleslav - and create 270 new jobs.

The new transmission (MQ100) is will be used with petrol engines with torque outputs of up to 120Nm, and features a number of weight saving measures to improve overall efficiency. As a result, the new transmission has one fifth fewer components than the MQ200 gearbox currently manufacturered at Mlada Boleslav.

Skoda Auto chairman Reinhard Jung said: "We are planning to use the new transmission in the new car at first, but we may also use it in other models of our brand and other small vehicles manufactured within the Volkswagen Group. The production launch is scheduled for late 2010."

The extension of transmission production at the Mlada Boleslav engine manufacturing plant comes as Skoda prepares to ship its three millionth gearbox.

Despite the global economic downturn, the plant - which produces small capacity engines for the VW Group - has benefited from the many car scrappage schemes in operation around Europe.