Daimler Chrysler has announced that development of a new diesel version of their Liberty model jeep will be unaffected by the company's efforts to cut costs.

According to Jan Zverina, a Daimler Chrysler spokesman, 5,000 are to be produced in the first wave, a significant commitment to the diesel market in light of the current economic climate.

The announcement is one of nine new projects for the Chrysler Group, confounding rumours that the company is having to reduce spending on product development.

Speculation has been mounting that development might be cut back after Dieter Zetsche, Chrysler Group chief executive officer, said the firm was seeking to slash costs by more than $1 billion.

The news comes during what has been a good month for the diesel market: the Environmental Protection Agency (EPA) announced on June 3rd that it had sanctioned diesel engines from four producers after they passed the EPA's tough 2007 emissions regulations.

Some analysts such as Walter McManus, head of global powertrain forecasting for J.D.Power and Associates, estimate that diesels could account for as much as 12 per cent of US sales by 2012.