Toyota Motor Corp has decided to scrap plans to develop diesel engines with Isuzu Motors Ltd in what is likely to be the first of a series of restructuring measures under new management, the Nikkei business daily said.
Last year, Toyota had suspended the project to develop a 1.6-litre diesel engine with truck maker Isuzu, in which it holds a 5.9 percent stake, due to uncertainty over vehicle demand and efforts to reduce capital spending.
The two automakers had planned to start producing the 1.6-litre engines, to be mounted on Toyota cars in Europe, in 2012.
That plan was thrown into further doubt as Toyota in May forecast its operating losses to balloon to 850 billion yen ($8.9 billion) in the year to March 2010.
Two weeks ago, President Akio Toyoda told his first news conference on the job that Toyota would drop certain projects after stretching itself too thin, adding that a focus on hybrid vehicles in Europe would be one new initiative.
Toyota and Isuzu both said no decision on the diesel engine cooperation had been made. Isuzu's shares fell 5.2 percent to 147 yen in Tokyo after the report, while Toyota was roughly in line with the broader market, down 0.6 percent.
With its German rivals such as Volkswagen AG and Daimler AG planning to launch hybrid vehicles, Toyota intends to export the Prius and other hybrids from Japan for the time being, the Nikkei said.
Further ahead, the company will consider manufacturing hybrid versions of its passenger cars, such as the Auris subcompact, in Europe, the paper said.
