TOKYO: Japan's Isuzu Motors Ltd. and Volkswagen AG of Germany have started negotiations on a truck business tie-up, a newspaper report said Friday.
The two firms will soon sign a confidentiality agreement and enter into full-scale talks, with an eye toward signing a deal later this year, the Nikkei business daily said.
They would also consider acquiring stakes in each other, according to the newspaper.
Under the plan, Isuzu would supply midsize diesel engines to Volkswagen, while the German automaker would provide advanced technology to the Japanese company, it said. They would also begin joint procurement of engine components.
Isuzu will likely supply a seven-litre-class diesel engine for midsize trucks for Volkswagen, as well as providing a three-litre-class diesel engine for use in Volkswagen commercial vans and small trucks, it said.
From Volkswagen, Isuzu will receive engine control and body safety technology used in the German automaker's passenger cars, it said.
The two firms may expand their cooperation to include development of hybrids, electric vehicles and other environment-related technology, it added.
By sharing pickup truck technology, Volkswagen will be able to cut costs and lower prices, which is crucial to boosting market share in emerging countries, the Nikkei said.
Isuzu ended a 35-year tie-up with General Motors in 2006. Toyota Motor Corp. now holds a 5.9 percent stake in Isuzu.
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