Nissan Motor Co. and Mitsubishi Motors Corp. have agreed to jointly develop and produce automatic transmissions, continually variable transmission systems (CVT) and other auto parts, officials of the two companies said Thursday.

Mitsubishi will spin off its automatic transmission and CVT operations by April, and the spinoff will be integrated with Nissan's subsidiary JATCO TransTechnology Ltd. by summer.

The integrated transmission maker, which will likely be owned 80 percent by Nissan and 20 percent by Mitsubishi, will be capable of manufacturing 4 million transmissions annually.

It is the first time for the two major automakers to collaborate on a major auto parts business.

Some 1,400 Mitsubishi employees at its AT and CVT operations will move to the integrated company, and the facilities related to the transmission development and production will remain at MMC plants in Kyoto and Okayama Prefectures for some time.

Hiroshi Yajima, a board member and senior vice president of MMC said that although AT and CVT production is integral to automakers, research and development costs are making it increasingly difficult to survive global competition.

However, Yajima said the automaker has no plans to outsource its manual transmission development and production.

Meanwhile, Kenichi Sasaki, chairman and chief executive operator of JATCO, said the transmission maker will be able to gain global competitiveness through the alliance in terms of output as well as development and production lineups.

"The competition among automakers has been intense in areas like improving fuel efficiency and lowering emissions, and although AT and CVT are important parts of vehicles, more automakers will outsource transmissions to suppliers to save costs," Sasaki said. "And I think it's a chance for JATCO to become a global supplier to various automakers."

JATCO, currently owned 99.7 percent by Nissan, manufactured some 2.2 million transmissions in the year ended March 2001, among which 75 percent were used by Nissan vehicles, he said. It also has business relationships with other automakers, including MMC, Mazda Motor Corp., Fuji Heavy Industries Ltd., and German automaker Volkswagen AG.