Toyota and PSA Peugeot Citroën are to work together on new technologies to reduce carbon dioxide emissions from vehicles.
The two companies, which have been holding exploratory talks for several months, are discussing ways to meet new targets in Europe on emissions controls, according to today's Financial Times.
Vehicle manufacturers have given undertakings to the European Commission to cut average CO2 emissions from cars by 25 per cent by 2008.
An FT source “close to the negotiations” said: "We are now focusing on how to cope with very strong CO2 emission regulations. It is about technological development and feasibility on how both parties can co-operate with EU standards."
It is understood that Toyota wants to exploit PSA's expertise in environmental technology, where it has begun to renew its engine range to meet CO2 emissions targets of no more than 140g/km.