STUTTGART, Germany—Daimler Truck AG and engine manufacturer Cummins Inc. have established a global strategic partnership to produce and develop engines for commercial vehicles.

Under the agreement, Cummins will establish an engine assembly plant at the Mercedes-Benz manufacturing campus in Mannheim, Germany. The facility will produce medium-duty diesel engines for Daimler trucks and buses. The engines will be designed to comply with the Euro VII emission standards, which went into effect last year.

With the changeover to the stricter Euro VII standard, Daimler would have had to invest considerable resources to develop a compliant medium-duty engine, says Martin Daum, chairman of the Board of Management at Daimler Truck. The partnership with Cummins frees those resources to focus on other technologies, including non-diesel engines.