TURIN -- VM Motori will allow China's Jiangling Motor Company Group to produce two series of the Italian supplier's diesel engines.
Jiangling Motor, based in Nanchang in the Jianxi province, will invest 800 million yuan (E78 million) to create a new engine plant to produce 2.5- and 2.8-liter common-rail turbodiesel engines.
Production of the engines will start in 2006 and reach 60,000 units a year at full capacity.
The engines meet Euro 3 emission standards and are designed to potentially comply with Euro 4 standards.
Jiangling Motor builds SUVs, pickups and minibuses. It sold 61,734 units last year and plans to boost sales to 80,000 units this year and to 100,000 units in 2005.
Founded in 1968, Jiangling Motor also has joint ventures with Ford Motor Co. and Isuzu.
In March, VM Motori signed an agreement with GM Daewoo to license the South Korean carmaker its 2.0-liter four-cylinder engine and its derived 1.5-liter three-cylinder turbodiesel.
GM Daewoo will invest E329 million to build a 250,000 engines-a-year plant in its Kunsan complex in South Korea. Production will begin in early 2006.