The novel PM (powder metallurgy) steel for automotive power-train gear components were developed to reduce manufacturing cost, while meeting the requirements. The high-density PM steel was manufactured by mixing using special Cr-Mo atomized iron powders, high-pressure compaction, and sintering. Tensile strength, charpy impact, bending fatigue, and contact fatigue tests for the PM steel were carried out comparing to the conventional forged steel. The pinion gears for 6-speed auto-transmission were also manufactured by helical pressing, sintering, and external rolling process (selective surface densification). In order to evaluate the durability of the PM parts, the auto-transmission durability tests were performed using dynamometer tests. Results showed that the PM steel fulfilled the requirements for pinion gears indicating suitable bending and contact fatigue strengths. The PM gears also showed improved gear tooth profile and better performance during the transmission durability tests. In particular, the PM gears manufactured by helical pressing and selective surface densification showed a significant advantage in reducing the manufacturing cost of about 30% as compared to the conventional forged steel gear manufactured by tooth machining (hobbing, shaving, and grinding) process.