BMW no longer needs the partnership with PSA and will let it expire after 2016

Article by Christian Andrei, on September 10, 2013

It’s likely that BMW Group and PSA/Peugeot-Citroen will cut their cooperation on small gasoline engines when the project ends in 2016, a source told Bloomberg. The source asked to be anonymous as the talks aren't public. He shared that BMW doesn’t anymore have a need for the partnership since it’s already developing its own engines. Meanwhile, PSA’s alliance with General Motors Co. is becoming broader.

These comments came out in reaction to a report by French business newspaper Les Echos that the carmakers intend to cut their ties. The expiration of the program would mean the end to a cooperation that began in 2002, when BMW and PSA made a deal to develop and manufacture up to 1 million small gasoline engines.

They later planned to build components for hybrid electric-gasoline systems. Last year, the hybrid plan unravelled as PSA and GM had begun to set up their partnership in early part of 2012. These jointly produced engines were installed in BMW's Mini small cars, Peugeot's mid-range vehicles and the Citroen brand's DS4 and DS5 models. They expanded the partnership in 2010 to also include four-cylinder motors.

BMW is working on the development of its own three-, four- and six-cylinder gasoline and diesel engines. Last July, BMW CEO Norbert Reithofer told German financial daily Boersen-Zeitung that the Mini will be using these engines.

So far, BMW and PSA have not made any comments about this recent report and would only state that the combustion-engine program will continue until 2016. The alliance between PSA and GM includes a joint venture to procure parts in Europe and the development and production of cars that the manufacturers intend to start selling in 2016. Under the partnership, GM owns 7% of its French counterpart.

Topics: bmw, psa, partnership

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