Isuzu Motors Ltd, Japan's biggest maker of buses and trucks, is permitted to raise its stake in an engine venture with China's Qingling Motors Co to more than 51 per cent, the Chinese company said yesterday.

Isuzu and Qingling agreed on Tuesday to form a 680 million yuan (US$85 million) venture in Southwest China's Chongqing Municipality to make engines and truck components. Tokyo-based Isuzu can raise its stake in the venture to more than 51 per cent, subject to its contribution to sales, Qingling said.

Qingling, based in Chongqing and 20 per cent owned by Isuzu, assembles Isuzu trucks, pickup trucks and sport-utility vehicles in China. The company is increasing the production of engines to tap rising demand for parts and to cut costs. Qingling's equally owned venture with Isuzu is designed to make and sell 175,000 engines each year, the company said in September.

Isuzu is investing in China to tap the country's economic construction boom, which increases demand for trucks and commercial vehicles.