Friday, June 15, 2007

Toyota in talks with Isuzu on diesel development

YURI KAGEYAMA / Associated Press

TOKYO -- Toyota Motor Corp. said Friday it's in talks with Japanese partner truckmaker Isuzu on developing diesel engines, but no details have been decided.

The Nikkei, Japan's top business daily, reported in its Friday's editions that Toyota, Japan's top automaker, will outsource diesel engine production to Isuzu Motors Ltd., which has a reputation for top-notch diesel technology.

Isuzu will set up a plant in northern Japan for low-emission diesel engines and produce 200,000 engines per year for Toyota small cars for export to Europe, the report said.

Demand for diesel vehicles is growing especially in Europe because of worries about global warming.

Although diesel-powered automobiles generally have good mileage, which is a plus for reducing global warming, they also produced more noxious fumes than gasoline engines. But recent advances in diesel technology has cut those fumes to make it more environmentally friendly.

Toyota already produces diesel engines in Europe, but it has tended to focus more on a different kind of ecological technology called hybrids, in which a car switches between a gas engine and electric motor for fuel efficiency.

Isuzu said in a statement that it was in talks with Toyota on "all areas, including development and production" but nothing had been decided.

Toyota said in a statement it was discussing possible diesel engine development with Isuzu but nothing had been decided.

The Nikkei said Toyota decided it needs help from Isuzu to continue to compete in diesel technology with rivals, such as Honda Motor Co., which is strengthening its diesel lineup.

By collaborating with Isuzu, Toyota can hope to save development costs for "green" diesel engines, the Nikkei said.

Toyota owns a 5.9 percent stake in Isuzu. Isuzu formed a capital alliance with Toyota in November after dissolving its tie-up with General Motors Corp. in April 2006.