Isuzu, Toyota Shelve Development of Clean Diesel Engine

The companies had planned to develop a 1,600cc aluminum-made diesel engine for small Toyota cars to be sold in Europe.

As the global economic downturn hits the auto industry hard, Isuzu said on Dec. 16 it had shelved plans to jointly develop a clean diesel engine with Toyota.

Isuzu Motors Ltd. and Toyota Motor Corp. had planned to develop a 1,600cc aluminium-made diesel engine for small Toyota cars to be sold in Europe, but markets there have been engulfed in the global financial crisis.

Production of the engine was due to start around 2012 at a new plant that an Isuzu subsidiary would build in the northern Japanese city of Tomakomai.

Toyota, which has a 5.9% stake in Isuzu, has formed a business tie-up in research and production with the truck maker.

Isuzu is also reviewing investment plans, the spokesman said. Isuzu president Susumu Hosoi said the company intends to freeze some capital spending plans, including those in Saudi Arabia and Russia, according to recent interviews published on Dec. 16 by Kyodo News agency and the Nikkei daily. "Given unclear outlooks for sales, the market and foreign exchange rates, we have to freeze all projects that have not yet been officially decided on in order to restrain our spending," Kyodo quoted Hosoi as saying.

The Isuzu president said he would like to help the group's ailing U.S. partner General Motors "but what we can do is very limited because we are also in a difficult situation," the report said. He said it was "impossible" for Isuzu to buy GM's midsize truck operation.

Copyright Agence France-Presse, 2008

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