Toyota cancels diesel engine development project with Isuzu: sources

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NAGOYA, July 7 Kyodo -
Toyota Motor Corp. has called off a joint project with Isuzu Motors Ltd. to
develop a diesel engine for small vehicles for the European market due to low
profitability prospects amid the recession, informed sources said Tuesday.
Japan's top automaker will instead focus on marketing gasoline-electric hybrids
in Europe as part of a new management strategy outlined by its new president,
Akio Toyoda, who took the helm in June, the sources said.
The move to scrap the joint development of a diesel engine and reinforce
fuel-efficient hybrid cars will represent a concrete example of Toyoda's
earlier announced policy of drawing the line between areas to strengthen and
withdraw from.
Toyota was previously planning to build a new factory in Tomakomai, Hokkaido,
and begin making the diesel engines from around 2012.
But a source close to Toyota said, ''There is currently no such plan.''
In December, Toyota said it had frozen the project to curb research and
development costs amid deteriorating business conditions, but apparently
decided to call it off altogether with auto demand showing few signs of
recovering.
Toyota and Isuzu formed a capital and business tie-up in November 2006 under
which Toyota bought 5.9 percent of the Japanese truck maker's outstanding
shares.
Toyota, which had lagged behind in the development of diesel engines, had
originally hoped to regain ground in the area through the alliance with Isuzu.
==Kyodo
2009-07-07 23:02:30