In a first-of-its-kind business arrangement between the two largest vehicle makers, Ford and General Motors yesterday announced a joint automatic transmission development project they claimed would advance the state of transmission technology and benefit the environment and their customers.

The two companies will work together to develop a high-volume, front-wheel-drive six-speed automatic transmission delivering improved fuel economy compared with today’s transmissions (which are commonly four- or five-speed).

GM and Ford have signed an initial agreement – a memorandum of understanding – with the final agreement expected this northern hemisphere winter. Both companies have been working independently on their own six-speed transmission programmes.

The comapnies claimed the new transmission would offer an estimated 4% to 8% improvement in fuel economy over traditional four-speed automatic transmissions available in today’s front-wheel-drive cars.

Under the MOU signed last week, Ford and GM agreed to:

*Share a common design, engineering and testing of the new transmission;

*Jointly work with suppliers to develop and purchase components;

*Assemble their own transmissions at their respective manufacturing plants.

The new six-speed should be available from the middle to late this decade on front-wheel-drive cars and sport-utility vehicles with mid-to-large displacement engines.

“This is an historic announcement and one that will have many important benefits for both companies,” said GM North America president Gary Cowger.

“This agreement has huge potential for both companies, and it will pay off for our customers and our shareholders,” said Ford group vice president, North America, Jim Padilla. “New transmissions require such high development costs that higher volumes will enable us to realise economies of scale and achieve our shared goals faster and at a better cost.”

Only the base transmission design will be common. Each company will have powertrains that they claim will be distinct in driving feel and performance, since the transmissions will be mated to different engines and the respective vehicle models in which they’re installed will have unique performance dynamics and tuning.

Each company is responsible for integrating the transmission into its own vehicles.

The transmissions will share significant common technology and components. The design being pursued is a new architecture that will have optimal steps between gears and a wider gear ratio span to improve fuel economy.

Featuring a compact design, the new six-speed will be capable of higher torque capacity when compared to most existing front-wheel-drive transmissions such as four-speed automatics and continuously variable transmissions (CVTs).

“The entire industry is going to a six-speed automatic,” Eric Fedewa, director of powertrain forecasting for auto consultant CSM Worldwide, told the Detroit News. “It’s a surprise to see GM and Ford working together, but, economically, it makes a lot of sense.”

Fedewa said the market could “easily reach two million units a year,” depending on how many cars and trucks use the transmission, the Detroit News added.

Ford is already collaborating with PSA Peugeot-Citroen to develop a line of state-of-the-art direct-injection diesel engines. The first, a 1.4-litre turbocharged unit, is already on sale in European subcompact hatchback cars such as Citroen’s C3, Peugeot’s 206 and Ford’s Fiesta and Fusion.