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General Motors is to buy a 50 per cent stake in VM Motori, the Italian company that makes diesel engines for light commercial vehicles as well as for agricultural, industrial and marine use.

VM has been owned since 1995 by the Penske Corporation, a US group with interests in motor sports as well as transportation and logistics. Penske will retain 50 per cent of the business.

But the Italian company has made increasing inroads into mainstream markets in recent years, and has been working closely with GM's Powertrain Europe group, based in Turin, and with Isuzu, the CV maker.

GM announced at the Geneva Motor Show in March that it would be developing a new 2.9-litre V6 turbo diesel with VM Motori. The engine is due to launch in the Cadillac CTS in Europe in 2009 and features the first use of a closed-loop combustion control system. VM will make the new engine at its factory at Cento.

The acqusition of VM is a further stage in the rationalisation of GM's powertrain businesses. Last month, it announced the sale of its Allison Transmissions operations to a couple of private equity groups (click here for news story).