Toyota, Isuzu Suspend Joint Diesel Engine Project

TOKYO, Dec 16, 2008; Chang-Ran Kim writing for Reuters reported that Toyota Motor Corp has suspended a project to develop a 1.6-litre diesel engine with truck maker Isuzu Motors Ltd due to uncertainty over vehicle demand, Japan's top automaker said on Tuesday.

The two automakers had planned to start producing the engines, to be mounted on Toyota cars in Europe, in 2012.

"A decision was made early this month to suspend the project," a Toyota spokesman said, citing slumping sales.

Toyota has said it is reviewing all projects in its pipeline to find ways to cut costs as it faces pressure on profits. On Monday, it said it would suspend work on a new U.S. plant that was scheduled to build the Prius hybrid from late 2010.

Editing for Reuters by Michael Watson