Mitsubishi Motors, DaimlerChrysler and Detroit Diesel will develop a diesel engine designed to meet stricter emissions standards in the United States, Europe and Japan, for introduction in 2007, the Detroit News reported.

Mitsubishi spokesman Toru Kawahata told the newspaper that his company, its biggest shareholder DaimlerChrysler and Detroit Diesel, a DaimlerChrysler subsidiary, have also set up an organisation to focus on standardising parts and emissions technology.

Kawahata told the Detroit News that the moves "are part of the second phase of the Fuso (truck division) turnaround, where we are looking for areas to make development more efficient and to share components."

The Detroit News noted that Canter truck maker Mitsubishi Motors would next year sell 43% of its Fuso truck and bus unit to DaimlerChrysler, the world's biggest truckmaker, as the companies use their alliance to cut costs and increase sales.

Mitsubishi Motors is already developing a diesel engine with its top shareholder and another DaimlerChrysler subsidiary, the newspaper also noted.

According to the Detroit News, Mitsubishi Motors, which spends about 35 billion yen ($US286 million) a year on commercial vehicle research and development, said it expects co-operation with DaimlerChrysler and Detroit Diesel will allow them to trim the figure by about 30%.

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