BMW and PSA to end joint engine development?

Unlikely bedmates BMW and the PSA Peugeot Citroen Group are breaking up - or at least asking each other for some space. The two companies had joined forces in recent years to produce a range of 1.4L to 1.6L motors, powering BMW's second-generation MINI and cars from Peugeot and Citroen. The venture was originally intended to help the auto makers to improve engine technology in the fiercely competitive compact car segment, while saving money by sharing development costs.

BMW development executive Klaus Draeger recently told a German industry publication that cooperation with PSA was effectively ended. This news comes despite plans in late 2006 to evaluate the expansion of joint engine development efforts. Despite the success of the motors spawned by the joint venture, the engines were quite expensive to produce according to PSA boss Christian Streiff.

This summer, Mercedes proposed a closer working relationship with BMW, especially with engine technology. BMW hasn't agreed to the partnership, however, and with the PSA deal now out of the picture, it looks like BMW will be developing the lion's share of future engines on its own.