Ford To Buy Hybrid Engine Parts From Toyota Affiliate.

Aisin AW Co., a manufacturer affiliated with Toyota Motor Corp., said it will develop hybrid gas and electric power systems for Ford Motor Co.

The preliminary agreement between Ford and Aisin AW Co. marks a change in strategy for Toyota, whose U.S. partner up to now has been General Motors Corp. It also emphasizes the growing need among the world's top automakers to develop new partnerships to keep up with cost-cutting pressures and technological advances.

Aisin AW plans to supply Ford with electric motors for use in 10,000 to 20,000 gas-electric hybrid vehicles a year beginning in 2003, according to an Aisin AW spokesman, Hirotake Kondo. Mr. Kondo said that a final contract hasn't been signed. Aisin AW is a subsidiary of Aisin Seiki Co., a major auto-parts maker.

Both companies primarily supply parts to Toyota, which owns 41% of Aisin AW and 24.5% of Aisin Seiki. Toyota has taken a lead in hybrid technology, which offers cleaner driving and better ***** mileage than gasoline engines, by marketing the Prius in 1997. Since then, Honda Motor Co., another Japanese carmaker, has also come out with its own hybrid called Insight.

However, Aisin AW doesn't currently supply hybrid motors for Toyota or other auto makers and said it is now developing the motor it plans to supply to Ford. It wasn't clear whether Toyota will share its hybrid know-how with Aisin, or whether the new Aisin motor would be used in Toyota vehicles.

Ford unveiled a hybrid-electric version of its Escape compact sport- utility vehicle in January and said it would go on sale in 2003. Aisin's Mr. Kondo said his company's motors would be used in Ford's sport-utility vehicles but declined to name the model.

"Toyota's decision to seek relations with Ford is very natural," said Takaki Nakanishi, auto analyst with Merrill Lynch in Tokyo. "It has nothing to lose and a lot to gain."

General Motors has recently been strengthening its Asian presence through alliances of its own with Japanese automakers other than Toyota, Isuzu Motors, Suzuki Motor Co. and Fuji Heavy Industries, which makes Subaru cars.

Toyota declined comment on the Aisin-Ford news, saying it was a matter for Aisin AW. But Toyota officials have repeatedly acknowledged it is in talks with Ford looking for possible deals.

Aisin AW, based in Aichi Prefecture, central Japan, is about 40 percent owned by Toyota. It employs 6,500 people with annual sales of 410 billion yen ($3 billion) and supplies Toyota and other automakers. It has never had any business with Ford. Ford became interested in Aisin AW after Volvo came under the Ford umbrella in 1999, Kondo said.

Aisin AW sells automatic transmissions to Volvo. Ford declined to comment on the deal. A top Ford executive said last month that the U.S. auto maker's discussions with Toyota on various forms of cooperation were continuing but that progress was slow. Toyota and Ford are studying whether they can work together on low-emission vehicles and financial services.

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