GM Daewoo has signed an agreement with Italian diesel engine maker VM Motori to manufacture a series of 1.5 and 2.0-litre diesel engines. They will be built at a new diesel engine plant alongside GM Daewoo’s car manufacturing facility in Kunsan, South Korea.

According to Nick Reilly, president and CEO of GM Daewoo, total investment including engineering development for the new engine will be close to 475 billion Korean Won over the life of the programme.

Production of the new engines is due to begin in early 2006 with annual capacity expected to reach 250,000 units. The diesel engines produced at the 19,200-square-metre facility will power a full range of GM Daewoo vehicles, the first of which will be a new compact-class SUV. The engines will feature common-rail technology and meet the Euro IV emission standard. Selected applications, including the new Daewoo SUV, will feature a diesel particulate filter.

“With their growing popularity around the world, diesel vehicles will play a key role in our future growth,” said president and CEO Nick Reilly. “By leveraging VM Motori’s expertise and the expertise of GM Powertrain to develop additional features and key components, we expect to produce diesels that are among the best, the most efficient and provide the highest value in the industry.”

According to Roger Penske, Chairman of the Board of VM Motori, “We are extremely proud to join the GM Daewoo team. As a company with a long history of developing and producing diesel engines, we at VM Motori look forward to helping GM Daewoo continue to grow by satisfying the increasing demand for high quality, environmentally friendly diesels around the world.”

Construction of the engine plant is due to begin in June 2004 and finish in April 2005. GM Daewoo will hire over 250 new employees to staff the engine plant. The plant’s machine line will be 90 percent automated and its engine assembly line 40 percent automated. The entire plant will be flexible in order to accommodate future engine products.