Japan's Mitsubishi Fuso cuts back engine production - report

TOKYO (XFN-ASIA) - Mitsubishi Fuso Truck and Bus Corp plans to stop developing and producing engines for small trucks because of the soaring costs of coping with tighter emissions regulations, the Nikkei reported.

The newspaper said that as a result, the company, which produces 180,000 small trucks each year, will procure roughly 80 pct of its engines from other companies.

DaimlerChrysler AG owns 85 pct of the company and the Mitsubishi group 15 pct.

From 2009, tighter rules across the world will require truck makers to almost completely eliminate emissions of both nitrogen oxides and particulate matter.

Mitsubishi Fuso decided not to take on developing engines that meet these requirements because it was hit by a third straight annual net loss, which was due to a defect cover-up scandal and other factors, the Nikkei said.

The company plans to switch to outside procurement gradually, starting with the diesel engines for small trucks hitting the market in 2009-10.

It is believed to be negotiating with firms such as France's PSA Peugeot Citroen group and Italy's Fiat SpA group, the newspaper said.

Mitsubishi Fuso had been jointly developing engines for large trucks with DaimlerChrysler, so it will likely procure such engines from within the group, the Nikkei said.

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