Are Ford and GM Getting Friendly?

United States auto makers have been leading the way in the recent, albeit slow, economic recovery. The industry posted record August sales numbers and is expected to see strong September sales as well. Now, according to the New York Times, Ford (NYSE:F) and General Motors (NYSE:GM) might be teaming up to work on 8-, 9-, and 10-speed automatic transmissions.

Transmissions with more speeds are a critical step towards improving fuel economy. Currently, the manufacturers have to rely on specialty suppliers, which is costly. Developing in-house solutions could mean affordable transmissions with large ratio spreads. Research and development costs for new technologies like this are sometimes prohibitive.

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“It’s just not economically feasible for them to separately chase after every new fuel-efficiency technology under the sun,” says IHS Automotive analyst David Petrovski. “By collaborating, they’re able to use the best engineering concepts from both sides.”

The companies successfully worked together to produce a 6-speed automatic transmission in 2002. Advances in fuel economy would help the American auto makers compete with Toyota (NYSE:TM) and Honda (NYSE:HMC), which are turning to the United States in face of losses in Europe and production cuts in China.

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