Toyota has confirmed its plans to build a new compact diesel engine for the European market, with the first car to get the new engine likely to be the new Auris hatch. Isuzu is a specialist in building diesel powertrains and have been in talks with Toyota since November of last year.

The first new diesel to be developed under the partnership will be a 1.6L unit that should be available at the start of 2012, reports The Detroit News. Its limited diesel offering has held Toyota back in the European market, where diesel is now the number one fuel of choice. However, the Auris is already available with a 2.2L diesel engine but the powerplant doesn’t compare with its Euro rivals in terms of economy and emissions.

Final details of the new diesel partnership are still being nailed out but it’s expected that Isuzu will play the leading role. Toyota currently owns a 5.9% stake in Isuzu.