BMW is having a hard time making much money on the 1-series because it is capped in its upper price range by competition with the 3-series, yet it still features much of the same technology and is nearly the same size as its bigger brother. To help remedy this situation, BMW is looking to cut build costs while packing more features into the next 1-series, due in 2011 or 2012.

The model makes sense: spend less, charge more, make more profit. Improving the value of the 1-series while at the same time pushing it a bit further up-market will enable BMW to clear more cash per car sold - an important thing to do on a higher-volume car like the 1.

But how will BMW get there? Possibly by sharing many more components, and even platforms, with the 3-series. Sharing the costs across both ranges would improve the economies of scale for the 3-series too, but it runs the risk of making the 1-series too much like its next-step-up sibling. Offering a different range of body styles, including possibly a shooting brake variant, plus new engines and feature sets will be the way to distinguish the slightly-smaller 1-series, it seems.

Speaking of engines, fuel efficiency will also play a key role in the next-gen 1-series, with Europeans getting an all-new three-cylinder turbo petrol unit rated at an estimated 110hp (82kW), according to Auto Motor & Sport. The new engine, along with new technology applied to the 116d's diesel engine, will enable more models than ever to lay claim to CO2 emissions under 100g/km. This set of goals mirrors closely those of BMW's Project i city car. The usual suspects of naturally aspirated and turbo fours and sixes will also be on tap.

Keeping the value up will be a new range of 'driver assistance' technologies trickled down or derived from the 7-series and 5-series sedans. A forward-looking camera that aids lane detection and collision hazards and a HUD night-vision display are both possible candidates for inclusion in the next 1-series.

A host of new features are also expected for the next-gen 3-series, including a new GT body style not unlike the much-reviled BMW 5-series GT Concept.