Zhejiang Geely Holdings Group says it will bring the technology of its new acquisition Australian Drivetrain Systems International back to China to sell automatic transmissions to carmakers in the domestic market.

 

"We'll also look to source low cost parts for DSI in China," the carmaker said in a statement.

 

On March 27, Geely signed an agreement to buy DSI for some 58 million Australian dollars ($39.9 million).

 

Based in New South Wales, DSI builds four-speed and six-speed rear wheel drive transmissions and has an annual capacity of around 200,000 units.

 

The Australian company plans to launch a new six-speed front wheel drive transmission in 2009.

 

Other products under development include high torque seven-speed and eight-speed automatic transmissions, hybrid transmissions for petrol and electric cars, dual clutch transmissions and continuously variable transmissions.

 

DSI entered bankruptcy proceedings in mid February this year after its principal customers SsangYong Motor Co., Ford Motor and Chrysler LLC slashed orders.

 

Although automatic cars are becoming more popular in China, no domestic companies can make the transmissions for them.

 

Pummelled by the downturn, DSI is just one of a host of suppliers to have put themselves up for sale recently.

 

Cash rich but technologically weak, Chinese automakers are seizing the opportunity to upgrade their capabilities.

 

Earlier this year, Shanghai Automotive Industry Corp. (SAIC) sent a delegation to Canada to look into purchasing assets there, according to industry sources.

 

"Now is a good time for automakers to buy technology they don't have," says Frank Chou, vice president of business development at The PAC Group, a consultancy.

 

Nonetheless, Chou adds that Chinese acquisitions should not stretch to buying an entire car maker.

 

"A whole automaker would be too difficult to manage," he says. "There would be too many problems arising from cultural differences."