Mazda Motor Corp. plans to start producing passenger cars in Europe by 2002, company sources said Thursday. Mazda will use the European production facilities of U.S. auto giant Ford Motor Co., its largest shareholder, and purchase engines from PSA Peugeot-Citroen of France, they said. The company plans to procure 2,000cc fuel-efficient direct-injection diesel engines from Peugeot-Citroen. The firm is also considering buying 2,000cc aluminum diesel engines currently being developed by the French company and Ford, they said. Mazda is making the decision in hopes that the European auto market will expand. However, the scale of production has not yet been disclosed. Mazda is likely to produce the 626, which is known as the Capella in Japan, or the Familia, they said. The European production plan marks Mazda's latest effort to reduce its heavy dependence on exports, which stand at nearly 70 percent at present, and the effects of exchange rate fluctuations on earnings. It is expected to incur 80 billion yen in losses due to the foreign exchange rate in the current business year. The Hiroshima-based automaker had first planned to begin passenger car production in Europe in the early 1990s. However, it put off the plan after deciding to focus on establishing a strong foothold in the domestic market and on the company's restructuring efforts under Ford.