BMW, Peugeot Citroen Plan JV To Make New Engines

July 24, 2002

FRANKFURT, Germany AP reported that German carmaker BMW will team up with France's PSA Peugeot Citroen to develop a new family of gasoline engines for BMW's British-built Mini compact and for Peugeot and Citroen brand vehicles, the companies announced Tuesday.

The two companies will invest some 750 million euros ($745 million) initially in design and development for the project, which would produce up to 1 million engines a year and reduce costs.

BMW's research and development department is to design the engines, with Peugeot Citroen handling manufacturing and procurement. The project team will be headquartered in Munich, where BMW is based.

"The cooperation, which calls for both expertise in automotive technologies and the ability to manage large-scale production, is expected to generate economies of scale and meet both partners' segment-specific gasoline engine requirements," BMW's statement read.

Engines for the retro-styled Mini, produced in Oxford, already come from two other cooperative arrangements. Diesels are made together with Toyota while gasoline engines are produced with DaimlerChrysler.

BMW spokesman Marc Hassinger said the latest project was not strictly a joint venture, since no new company would be set up to run it. Engines produced by the project wouldn't be used in the company's BMW luxury cars, he said.