PARIS -- PSA/Peugeot-Citroen SA on Tuesday unveiled the second phase of a plan to make diesel engines with Ford Motor Co. to meet booming European demand for the cleaner, more efficient motors.
It said the two companies were investing a total of nearly $1.07 billion between 2001 and 2003 to make new 1.6-liter and 2.0-liter diesel engines.
They expect to produce 1.6 million of the engines per year by 2005.
The plan is part two of a four-stage cooperation venture announced in 1998, which has an production goal of 3 million diesel engines a year.
The move highlights the growing importance of diesel engines, which now power more than a third of European cars. Companies lagging in the technology, such as the Opel unit of General Motors, have suffered from a slowdown in sales and are struggling to catch up.
PSA and Ford said in a news conference that production of the engines had already started at PSA's Tremery plant in eastern France, the world's biggest producer of diesel engines. "Thanks to this strategy, the two groups will, in the short term, be the world's top makers of diesel engines," said Gilles Michel, PSA platform, technical and purchasing director.
The engines, which the companies described as the world's cleanest, will be used in some models of both companies from the second half of 2003 and will eventually be in 37 different vehicle versions, they said.
The two companies, which began the cooperation plan in 1998 and enlarged it in 1999, already make 1.4 liter diesel engines at the Tremery plant. They said total investment in the project so far, including the latest amount, was $1.5 billion.
CONSIDERING THE U.S. MARKET
Derrick Kuzak, vice president of product development for Ford Europe, said Ford was mulling how to develop diesel technology in its key U.S. market but declined to give details.
"Diesels used to have a bad name -- noise, smell and lack of performance; that's now history. Diesel accounts for 40 percent of the European market and is rising," Kuzak said.
The joint venture also is an example of PSA's strategy of pursuing cooperation deals with other manufacturers on specific projects rather than taking equity stakes in other companies.