Hyundai Motor said it will set up a truck joint venture to produce engines with DaimlerChrysler in 2002.
Hyundai said the two firms would invest 180 million dollars in the joint venture which would initially be capitalized at 100 billion won or 76 million dollars.
The Hyundai Motor president said his company will be able to make Daimler's 900 series diesel engines from 2004 at an annual production rate of 50-thousand units.
As an intermediary step to a full-fledged commercial vehicle cooperation, the two companies had agreed to set up a diesel engine joint venture in July.
Hyundai officials said DaimlerChrysler's diesel engines would be produced in the Korean firm's commercial vehicle plant in Chonju, about 250 kilometers southwest of Seoul.
Analysts said the joint venture will benefit both companies, allowing Hyundai to learn about advanced diesel engines and Daimler to expand its market share in Asia.
The U.S.-German company has targeted Korea, China, and Japan as growth areas for its truck business. Its truck business is also under pressure in the United States, where its Freightliner unit posted a first quarter loss.