Toyota Motor has called off a joint project with Isuzu Motors to develop a 1.6 litre diesel engine for small vehicles for the European market due to the likelihood of low profitability amid the recession, informed sources were quoted as saying on Tuesday.
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Toyota will instead focus on marketing petrol-electric hybrids in Europe as part of a new management strategy outlined by new president Akio Toyoda, who took the helm in June, the sources told Kyodo News.
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, the news agency noted.
Toyota previously planned to build a new factory in Tomakomai, Hokkaido, and begin making the diesel engines from around 2012.
But a source close to Toyota told Kyodo: ”There is currently no such plan.”
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By GlobalDataLast 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 new car 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% of the truck maker and diesel engine specialist’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.
Toyota and Isuzu both told Reuters, meanwhile, no decision on the diesel engine cooperation had been made.
The engine would have gone into models such as the Auris but Toyota was recently reported to have decided to build hybrid versions instead at its UK plant.
