Toyota Motor Corp. and Isuzu Motors Ltd. plan to set up a joint corporation to produce next-generation environmentally friendly diesel engines, company sources said Wednesday.
The joint company is expected to start building about 200,000 such engines annually in about five years for use in Toyota compact cars for the European market. Toyota also will consider giving Isuzu technological assistance for the future development of a diesel-electric hybrid engine, according to the sources. Toyota's plan to team with Isuzu reflects its concerns that the nation's largest carmaker may not be able to compete well in the global market unless it develops highly fuel-efficient diesel engines as quickly as possible, analysts said.
Diesel engines are popular in Europe, and for years, Toyota has been at the forefront of hybrid car production, a great advantage for the carmaker in the global market. But even though electric hybrid cars get good mileage when used on city streets, diesel-engine automobiles are better at long-distance travel on expressways.
In November, Toyota formed a capital tie-up with Isuzu when it gained a 5.9% stake in the latter, with an eye to jointly developing a new diesel engine. In late August, the two carmakers are expected to reveal details of a diesel engine to be manufactured by the joint corporation, the sources said. They will work to develop and build a 1,600cc to 1,800cc engine under the tie-up. The new engine will be built using advanced catalyst technology that curtails nitrogen oxide and other emissions. The goal is to meet Euro 5 standards for car emissions, which will go into effect in 2009.
Proposed production locations for the new engine include Poland and Hokkaido, according to the sources. In Europe, the diesel engine is regarded as best suited for meeting Euro 5 standards as it discharges less carbon dioxide and other emissions than gasoline engines.
By taking advantage of the cooperation with Isuzu, Toyota hopes to meet an anticipated increase in global competition in producing such engines. Isuzu hopes the joint engine production will help it gain more of Toyota's expertise in car production while helping curb costs in establishing a plant to build new engines, according to the sources. The two car producers also are planning to develop a diesel-hybrid system that would make it possible to achieve even better fuel efficiency. However, several hurdles remain before this goal can be reached, including the need to reduce development costs. Diesel engines are costlier than gasoline engines, and the combining of a electric system with a diesel engine would push up the price of a car equipped with the system, the sources said.
In Western Europe, diesel cars accounted for more than half of all new passenger automobiles sold in 2006. Meanwhile, the figure is less than 0.1% in Japan and only 6.3% in the United States. However, global market demand for diesel-powered vehicles is expected to grow due to rises in crude oil prices, according to analysts. (yomiuri.co.jp)