Press Release
BMW, Chrysler Announce Joint Four-Cylinder Engine Venture
10/03/96
BMW, Chrysler Announce Joint Venture to Produce Four-Cylinder Engines PARIS, Oct. 1 -- BMW Group and Chrysler Corporation announced today at the Paris Motor Show that they have entered into a memorandum of understanding regarding the design, development and production of an all-new family of four-cylinder engines. The 1.4 and 1.6-liter engines -- derived from a Chrysler design -- will power future small cars from Chrysler and Rover Group (a BMW Group subsidiary). They will be built in a new plant to be constructed in South America. The production of the engine will be undertaken by a joint venture company in which BMW Group and Chrysler Corporation both have an equal interest of 50 percent. A specific location for the plant has yet to be determined. This $500 million joint venture will result in a plant that is capable of producing up to 400,000 engines per year with the production split evenly between Chrysler Corporation and Rover Group. Chrysler will take the lead in the plant's processing systems and construction of the new facility, which is expected to be in operation by the end of 1999. "Latin America will be an important market for products of BMW Group in the future," said Bernd Pischetsrieder, Chairman of BMW AG. "Being present in this market with the production facility therefore follows the Group's strategic principles. With Chrysler Corporation as a partner, not only the joint production was made possible, but also an excellent engine will be available at affordable investment levels to power future Rover products in a very competitive market segment." "Developing new engine families is a costly business, and partnering in this way makes good economic and business sense," added Chrysler's Chairman Robert J. Eaton. "This kind of venture will even benefit our current operations -- in the US and abroad -- because it will increase our ability to export small cars." Added Walter Hasselkus, Chief Executive Officer of Rover Group: "The partnership with Chrysler Corporation provides an excellent basis to realize an ambitious small-car product program, as planned." BMW Group currently has no production operations in South America. For Chrysler, this is the second venture in the region announced in the last 45 days. In August, Chrysler announced that it will build a plant in Brazil to produce compact pickup trucks for distribution throughout Latin America. Chrysler also is nearing completion of an assembly plant in Argentina, to produce Jeep(R) Grand Cherokee and Jeep Cherokee vehicles. The joint venture brings together two companies with a similar sense of purpose, adds Chrysler's Tom Gale, Executive Vice President International Operations and Product Design, who led the Chrysler team that put this venture together. "Both companies focus on the core elements of the automotive business," said Gale. "This partnership meets our respective strategic production and distribution needs." The project is subject to BMW Group and Chrysler Corporation reaching definitive agreements, which is anticipated prior to year end, and obtaining the necessary approvals and consents.