After General Motors severed its ownership ties with Isuzu two years ago, the struggling Japanese automaker hooked up with Toyota. While Isuzu has never really made much of an impact in the car market, they have been successful in commercial vehicles, particularly with diesel engines. Toyota decided to tap that expertise to help develop a new small displacement diesel engine for the European market. Unfortunately, huge losses for Toyota this year have caused it to slash spending on many programs. One of the victims of the cutbacks has been that diesel program. Instead of a new 1.6-liter diesel, Toyota will focus on the technology it already has, specifically hybrids.
While hybrid sales are still small in Europe, other manufacturers are moving in that direction so Toyota will try to defend its turf. At some point, if sales pick up enough, it may even start hybrid production at its European facilities. Thanks to Jarrett for the tip!

[Source: Reuters]

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