Subaru has done a deal with Toyota to use its hybrid technology - and allow its own engineers to concentrate on developing a diesel engine for Europe.
Subaru is known for its commitment to the flat-four 'boxer' engine configuration and four-wheel drive. But sources in Japan say that the lack of a diesel is now costing it too many sales, with oil-burners accounting for half of all cars sold in Europe.
Kyoki Takenaka, boss of Subaru's parent company Fuji Heavy Industries, told Reuters that the firm had struck a deal to use Toyota's hybrid technology, and could thus devote resources to developing its own diesels. 'Because we're a small company, we had to choose between hybrid and diesel,' he said. 'Now that we have this arrangement with Toyota, diesel engine development and production are going to be our priority. We're hoping to get it to market sometime around the end of 2007, or 2008.'
The diesel engine (no configuration has been confirmed yet) is likely to be introduced on the Legacy model, in conjunction with Subaru's four-wheel drive system. Takenaka said he expects half of Subaru's European sales to be diesels by 2010.