GM, Ford in tie-up talks for engine development: report

05 August 2008

Mumbai: Detroit rivals General Motors Corporation and Ford Motor Company are discussing a possible collaboration to develop new engines and powertrain technologies as competition and costs take a toll on the US auto majors.

The two rivals, struggling to adjust to a shift in demand from gas-guzzling big trucks and sports utility vehicles toward smaller, fuel-efficient vehicles and hybrids, are looking for ways to reduce research and development costs, the Detroit News reported.

A deal would give the two companies access to each other's technology and help them offset product development costs, the paper quoted sources at companies as saying.

Developing an entirely new engine can cost $1 billion while a new transmission could cost about $800 million, the report said, adding, if the development costs can be slit, a new engine can cost just $500 million and a new transmission system $400 million.

Also, the use of onboard computers that control the operations of the components have also a lot to do with operating costs of vehicles.

The two had previously collaborated on the development of a fuel-saving six-speed transmission that is now the backbone of both companies' powertrain lineup.