Looks like the rumors of Isuzu's impending sale to Volkswagen appear to have been greatly exaggerated. Reuters is reporting that the Japanese automaker company has denied striking any such deal. Although the possibility of a VW takeover of Isuzu is looking slim as of now, the two companies are apparently looking to get together on a potential engine sharing deal.

According to Reuters, the two companies will engage in full-scale talks soon and are looking to close the deal by fall. The deal would put Isuzu in a supply role for VW's MAN commercial truck line, providing 7.0-liter diesel engines for its medium duty trucks and 3.0-liter diesel engines for its commercial vans and small trucks. In exchange, VW will share some of its engine control systems as well as safety technology from its passenger cars with Isuzu, which the company will likely put to good use in its next generation of pickups.

Volkswagen might benefit the most from this partnership, as it would allow the automaker to cut prices on its commercial offerings -- which is crucial for increasing market share in emerging countries -- to better compete with Daimler in the global market. Isuzu would neither confirm nor deny that the talks with VW were taking place, but the company said in a statement that it was still considering its options on operational cooperation.

Earlier this week, after reports that VW was considering buying all or part of Isuzu, the German automaker said it had no plans to purchase a stake in the company in the near future. However, the automaker said recently that the two companies might consider acquiring stakes in each other, depending on the success of the talks.

Source: Reuters via Automotive News (Subscription required)