Mercedes and BMW deal expected by year end

Mercedes-Benz and BMW are expected to make an announcement before the end of the year about a new partnership in regards to the development of four-cylinder engines for the next-generation B-Class (codenamed C412) and Mini.

The information comes from an inside source, who revealed to Automotive News Europe that the partnership could be extended within the near future. Germany’s carmakers are worried about development costs for a new range of low-emissions powertrains. BMW and Mercedes also want to increase the number of shared drivetrains to match the level that Audi enjoys by being partnered with Volkswagen.

There’s no plan for platform sharing as yet because BMW doesn’t need one, but Mercedes needs a new design for its next-gen A and B-Class models due around 2010/11. The source explained that the cost-savings from the co-development of engines and transmissions will be enough in the meantime.

BMW currently has an engine deal with PSA Peugeot-Citroen for its current Mini and the Munich-based carmaker is also in talks with several Japanese carmakers. Mercedes, meanwhile, is investigating using its C-Class components in its future small cars to create internal economies of scale.