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Fiat to supply engines to Daimler unit

From AAP| June 20,2007

DaimlerChrysler AG and Fiat SpA have agreed to arrange for a Fiat arm to supply its diesel engines to DaimlerChrysler unit Mitsubishi Fuso Bus & Truck Corp. to fit its trucks with the fuel-efficient engines, the Japanese truck and bus maker said.

Under the deal, Fiat Powertrain Technologies SpA will supply the environmentally-friendly 3-liter engines to Mitsubishi Fuso, starting in 2009, according to the Japanese maker owned 85 per cent by DaimlerChrysler.

The deal represents the first tie-up between DaimlerChrysler and another automaker since the Stuttgart-based automaker announced its plan in May to sell an 80.1 per cent stake in its struggling North American division Chrysler to US investment firm Cerberus Capital Management LP.

The deal calls for Fiat to supply 80,000 diesel engines annually to Mitsubishi Fuso for use in the Canter small truck.

Mitsubishi Fuso, noted for its own diesel engine technology, said in its statement, "First of all, we would like to call attention to the fact that the engines to be supplied to our company are excellent engines that provide high fuel economy and good environmental performance."

"It is significant for us to share development costs with another supplier and realise economies of scale (from joint production), given that today's regulations require that truck engines clear severe (emission) standards for the environment," it said.

The supply of diesel engines from the Italian automaker's Foggia factory will enable Mitsubishi Fuso's trucks to become more competitive in terms of price, it said.

DaimlerChrysler Chairman Dieter Zetsche said in a separate statement on the tie-up deal with Fiat, "Today's and future emission regulations demand a high level of investment and technological specification.

"This agreement provides a value added for both companies, Fiat Group and DaimlerChrysler," he said.

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