Tokyo, July 10: Japan's Isuzu Motors Ltd is hoping to emerge as the world's biggest supplier of diesel engines, considered to be "cleaner" and more environmentally friendly than conventional engines.

"We cannot survive in the future without becoming the world's No.1 at least in a certain sector. So we want to become the world's No.1 maker of diesel engines along with General Motors Corp (GM)," an Isuzu official told Reuters on Thursday.Isuzu, which is 37.4 per cent owned by GM, plans to boost global production of diesel engines to an annual 1.80 million units by the year 2005 from the current 800,000 units, the official said.

This would put Isuzu in pole position among makers of diesel engines, with output exceeding that of PSA Peugeot Citroen unit Automobiles Peugeot's - the world's top maker of diesel engines - current output of one million units.

GM has already started developing V8 4,000cc diesel engines for use in its minivans in the year 2000 but GM and Isuzu have not reached agreement yet on whether to use Isuzu-made diesel engines for the minivans.Diesel engines have become popular in Europe as they emit less carbon dioxide than gasoline engines. "Diesel engine vehicles now account for about 20 per cent of overall vehicle demand in Europe but is expected to grow to at least one-third of the total in the future," the Isuzu official said.Seiji Sugiura, an analyst at Nomura Securities Co Ltd's research unit, said alternative vehicles such as the electric car and the "hybrid" car, which has a gasoline engine, electric motor and electric generator all under the same hood could pose a tough challenge to diesel engines in the future.

"We have no plan to revise upward Isuzu's credit rating by this news because nobody knows what demand for diesel engines will be by the year 2005."Isuzu will have a bigger burden by having to spend more money for research and development," Sugiura said.

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