Between 2002 and 2004, more than four million common rail engines have been produced as part of this cooperation, with demand now threatening to outstrip supply.
As a result Ford is planning to spend £169 million in increasing capacity for the 1.4 and 1.6 litre diesel engines at its purpose-built Dagenham diesel centre, from 2007, and for the 2.0 litre engine at Volvo's Skovde engine plant in Sweden from 2006. This brings to over £550 million the total amount invested at Dagenham since 2003.
It could create 460 new jobs at the UK plant.
The agreements signed by PSA Peugeot Citroen and Ford in September 1998 involve a large-scale cooperative programme covering the joint design and production of four families of common-rail, direct injection diesel engines. These are: 1.4 and 1.6 litre engines, 2.0 litre engines, a 2.7 litre V6 engine and a new family of engines for light commercial vehicles. The details for this fourth phase of the programme are still to be announced.
Ford of Britain chairman, Roger Putnam, said: 'Dagenham won this investment in the face of stiff opposition from other Ford engine plants around the world. Presently, one third of all new cars sold in Europe are powered by a diesel engine and this figure is expected to reach around 50 per cent - approximately eight million units - by 2006.'