Mitsubishi Motors on Friday said it would soon supply engines to DaimlerChrysler's Smart city car unit.

A Kyodo News report said Mitsubishi would supply an engine of the same type as the turbo-charged engine to be used in its new minicar scheduled to go on sale as the 'i' in January 2006.

The engine will be further developed for use in smart's fortwo replacement model due out in 2007.

The engines to be supplied are natural aspirated and turbocharged units based on the i engine and will be produced in Mizushima, Okayama Prefecture.

Mitsubishi said it would be able to achieve economies of scale through the agreement, lowering costs on a per-unit basis.