Chrysler Group LLC, the U.S. automaker majority owned by Italy's Fiat , will invest $374 million in four Indiana plants to support production of its more fuel-efficient eight- and nine-speed transmissions by the end of the year.

The move will create up to 1,250 jobs in Indiana, including as many as 850 jobs at the company's new Tipton Transmission Plant, Chrysler said on Thursday.

Chrysler is spending $162 million to make a nine-speed transmission at Tipton. Production at Tipton is expected to start in the first quarter of 2014.

About $212 million will be invested in the Kokomo Transmission, Kokomo Casting and Indiana Transmission I plants to make the eight- and nine-speed transmissions.

That money will be used to install additional tooling and equipment needed to make Chrysler's eight- and nine-speed transmissions by the fourth quarter of 2013.

(Reporting By Bernie Woodall in Kokomo, Indiana; Editing by Gerald E. McCormick and Sofina Mirza-Reid)