OSAKA -- Daihatsu Motor will sell its efficient compact-vehicle engines to China FAW Group starting as early as next year, with an eye toward expanding the business to other automakers down the road.
The Japanese minivehicle maker has reached a basic agreement with Tianjin FAW Xiali Automobile, a compact-vehicle unit of FAW. The Japanese company will sell engines made in Indonesia, at an expected clip of around 100,000 per year. FAW is a major partner of Daihatsu parent Toyota. Tianjin FAW is strong in compacts with 1- to 1.3-liter engines but its sales have been sluggish lately.
The unit currently buys transmissions from Daihatsu, but decided to adopt the engines as well in order to improve the fuel economy and driving performance of its vehicles. If the cars carrying Daihatsu engines become a hit in China, the two may start joint production. And Daihatsu will consider supplying other Chinese automakers as well.
Chinese authorities are moving to tighten regulations gradually to improve the fuel economy of passenger vehicles in the country, aiming to bring the level on a par with Japan and Europe by 2020.
Daihatsu has a major plant in Indonesia, and sells low-price vehicles with gas mileage ratings of at least 20km per liter there. The engine it will ship to Tianjin FAW will be the same type as the one installed in its mainstay compact.
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