Nissan has approached PSA Peugeot Citroën about using its large diesel engine. The approach, which is at an extremely early stage, comes despite Nissan being controlled by Renault, Peugeot's arch-rival.
Nissan is also considering developing its own diesel, working with Renault or using a Suzuki diesel currently used by Renault. The aim is to use the engines in Nissan's US light trucks and SUVs and also to support a possible launch of luxury cars in Europe.
If Nissan adopts a Peugeot power unit it would be a further boost for PSA's partnership strategy. Unlike most other carmakers it remained aloof from the merger mania in the industry in the past two decades and has instead sought to share costs through joint development projects.
Patrick Pélata, chairman of Nissan's European operations, said: "There is a programme going on today for big diesel engines. We are contacting people. We are looking at the same time at what we could do either with Renault or inside Nissan." He said discussions had begun with Peugeot but were at an early stage.
Nissan, which is growing fast, wants access to a large diesel engine to use in its light trucks for the US market in case drivers there begin to switch away from petrol after new regulations helping diesel come into force in 2006.
However, Peugeot denied talks were under way. "There are absolutely no talks," said a spokesman. "There is a hope on their part, maybe."
Peugeot, the world's biggest diesel manufacturer, already has a joint venture with Ford to develop and produce 3 million diesel engines. A V6 - the engine Nissan is interested in - was unveiled earlier this month and will be installed in the Jaguar S-Type. The cost of development and of setting up a factory at Ford's Dagenham site, near London, totalled €350 million.
Mr Pélata said Nissan was interested in having access to a large diesel for the US pick-up truck and sports utility market. But he said it was also a requirement for the launch of upmarket vehicles in Europe, either under the Infiniti brand the company uses in the US, or as Nissans or Renaults. Diesels make up around 40 per cent of all car sales in Europe.
The company remains concerned that European import tariffs of 10 per cent would make luxury sales less profitable, but Mr Pélata said the recent fall in the yen would help.
- Financial Times