Zhejiang Geely Holding Group Co. will start building a six-speed automatic transmission in December -- a significant upgrade from its current four-speed automatic gearbox.

The company will use a transmission designed by Australian supplier Drivetrain Systems International, which Geely acquired last year. 

Geely is using its acquisitions to fuel rapid growth. In the third quarter of 2010, it will complete the acquisition of Volvo Cars from Ford Motor Co.

To produce transmissions, Geely began construction of a plant in Jining in eastern China on June 8. The 1.6 billion yuan ($234 million) factory will produce as many as 300,000 six-speed gearboxes a year. These transmissions will be used with engines with a displacement of 1.8 liters or more.

Its first products will be mounted on Geely's Vision compact car, a Geely spokesman told Automotive News China. Early next year, the locally built Drivetrain Systems transmission will be installed on Geely's mid-sized sedans, SUVs and the London taxi built by U.K.-based subsidiary Manganese Bronze Holdings Plc.

Chinese drivers, especially first-time car buyers, prefer cars for their ease of driving.

In China, automatic transmissions are rapidly gaining market share. According to Geely, 40 percent of cars sold in China in 2008 had automatic transmissions, up from 25 percent in 2005. By 2015, half of all passenger vehicles sold in China will have automatic transmissions, Geely predicts.

Geely is the only domestic Chinese company assembling its own automatic transmissions, but its current product is only a four-speed. Chery Automobile Co. unveiled a six-speed automatic transmission in April, but has yet to mass-produce it.

The supply of automatic transmissions in China is dominated by overseas-based companies such as ZF Friedrichshafen AG, Aisin Seiki Co. and JATCO.

To gain access to advanced transmission technology, Geely acquired Drivetrain Systems in March 2009 for 58 million Australian dollars ($39.9 million).

The company, based in New South Wales, Australia, builds about 200,000 transmissions a year. The company also is developing seven-speed and eight-speed automatic transmissions, dual clutch transmissions, continuously variable transmissions and transmissions for electric vehicles.