Toyota to supply diesel engines for BMW's Mini

TOKYO, May 13 Reuters reported thet Japanese auto giant Toyota Motor Corp said today it would supply 10,000 to 20,000 diesel engines per year from 2003 to Bayerische Motoren Werke AG (BMW) for the German carmaker's Mini brand.

The Japanese carmaker said the engines, which Toyota makes for its own European subcompact the Yaris, would be shipped from Japan to the production centre for Minis in the United Kingdom.

Toyota officials declined to comment on the monetary size of the alliance.

The Financial Times newspaper said on Monday that BMW would announce a production and development tie-up with Toyota this week after almost a year of negotiations.

The Bavarian-based carmaker has said the new version of the British cult car the Mini was selling well as part of its efforts to create a "premium" segment of small cars.

Christopher Richter, an auto analyst at HSBC Securities, said the deal is probably not very big in monetary terms but does suggest Toyota is making good diesel engines. Japanese automakers have traditionally been seen as weak on small diesel engines.

"BMW hasn't put a lot of resources into small diesel engines. In Europe, it's mainly been Peugeot and Volkswagen that have led the field," Richter said.

"It sounds like BMW wanted to be able to offer a diesel engine option but didn't want to go to a direct competitor," he added.