July 16, 2007 / 10:03 PM / 11 years ago

GM to buy 50 pct of VM Motori from Penske Corp

DETROIT, July 16 (Reuters) - General Motors Corp. (GM.N) said on Monday it is buying 50 percent of Italian diesel engine maker VM Motori from Penske Corp. and will launch a new high-performance V6 diesel engine built by VM Motori.

GM gave no financial details on the deal but said it has reached a joint venture agreement with Penske, a closely held transportation services company headquartered in Bloomfield Hills, Michigan, to purchase equity in VM Motori.

GM and VM Motori will jointly develop a 2.9-liter V-6 turbo diesel engine that is scheduled to launch in the Cadillac CTS in Europe in 2009, the No. 1 U.S. automaker said.

VM Motori plans to build the new unit at its plant in Cento, Italy, and is responsible for the engine’s design, development and testing, GM said.

Dan Hancock, vice president of GM Powertrain’s global engineering, said in a conference call that the automaker intends to introduce diesel engines in the United States in pickup trucks and Hummer H2 sports utility vehicle.

“Diesel engines are a very important part of GM’s global portfolio,” he said, but did not give a timeline for the launch in United States.

GM currently offers 17 diesel engine variants in 45 vehicle lines around the world and sells more than one million diesel engines annually.

Starting with 2008 model year cars, the United States will begin phasing in what will be the world’s strictest regulations for harmful nitrogen oxide (NOx) and particulate matter (PM) emissions.

Diesel cars have had higher exhaust levels of nitrogen oxide than gasoline cars, and GM, like other automakers, has been lukewarm about diesel engines as a solution for boosting fuel economy, citing the high cost of developing an engine clean enough to meet the coming U.S. standards.

In a video blog on the company’s Web site, GM Vice Chairman Bob Lutz had said the company would use clean diesel engines in passenger cars, SUVs and other light-duty trucks.

He has said, however, that emissions hardware and control systems needed to meet the new standards would add another $2,000 to $2,800 to diesel cars’ premium of $1,000 to $2,000 over gasoline-engine cars.

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