BMW plans joint venture to make small cars

BMW in move to make small cars jointly with Italian rival

BMW, the world's largest premium car maker, is in talks with Fiat of Italy to jointly develop Mini and Alfa Romeo brand cars.

A deal with Fiat could involve sharing common manufacturing 'platform' between the next-generation Mini, due to hit markets in about five years, and Alfa Romeo's MiTo supermini.

The move represents a departure for BMW, which has so far agreed to cooperate with only rivals such as PSA Peugeot Citroen and Daimler in the fields of engines or hybrids.

Fiat, by contrast, has partnered with the likes of Tata Motors of India and Ford of the US to build vehicles

"We are currently examining with the Fiat group possibilities for the joint use of components and systems in Mini and Alfa Romeo vehicles in order to achieve economies of scale," BMW management board member Friedrich Eichiner said in a statement.

The move comes as many car makers seek alliances to share production and other costs in the highly competitive sector known for its meagre profit margins.

"Everything is going in the wrong direction for the industry: adverse currency effects, higher raw materials prices which have so far been impossible to pass on to customers, and now a much weaker European market," Deutsche Bank analyst Gaetan Toulemonde said.

Both BMW and Fiat had reportedly been in separate talks with Daimler over possible joint development of small cars with Mercedes, but negotiations yielded no results.

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