DaimlerChrysler Truck Group and Fiat Powertrain Technologies (FPT) have announced that they will cooperate to supply DaimlerChrysler group companies with engines from Italy.

The first step of this agreement concerns the long-term supply of light-duty diesel engines (FPT F1C) to the Mitsubishi Fuso Bus & Truck Corporation (MFTBC), to be used in the Canter light commercial vehicle which will be sold in most major markets.

FPT will supply around 80,000 F1C engines per year to Mitsubishi Fuso starting in 2009. The supply volumes will increase over the following years.

The engine is a common rail diesel engine, with displacement, rated at 177hp at 3,500 rpm and torque of 400Nm/1,400 rpm. The F1C engine is currently manufactured only in Foggia, Italy, but production at an additional site will shortly start as part of a FPT globalisation plan. The engine is currently used in the Iveco Daily and Fiat Ducato.

In a statement the two companies said that they are also investigating further potential business opportunities in other markets.

“This agreement is a key step in our strategy aimed at developing strategic partnerships in all sectors of the Group” said Sergio Marchionne, CEO of Fiat Group. “Our ability to partner with DaimlerChrysler is confirmation that the decision to carve out our powertrain activities as a separate sector two years ago was the right one, and that we have products and technical skills to satisfy the needs of a demanding market.”

DaimlerChrysler chairman Dieter Zetsche said: “Today’s and future emission regulations demand a high level of investment and technological specialisation. This agreement provides a ‘value-added’ for both companies.”

FPT was established in 2005 and aims to attract engine business from non-Fiat group customers. Last year it produced 500,000 engines but plans to increase this to 1.1m by 2010.