TOKYO - German luxury carmaker BMW has reached a basic agreement with Toyota Motor Corp to buy up to 30,000 diesel engines a year from Japan's biggest automaker, the Yomiuri Shimbun newspaper said yesterday.
BMW board member Burkhard Goeschel was quoted as telling the newspaper the formal signing of the deal was expected by the end of October. The engines would be used in 30 percent of BMW's Mini cars, which went on sale in Europe in July, the newspaper said.
A Toyota spokeswoman would not confirm the report, saying only that the companies were discussing technical cooperation.
"We have been having discussions, but we have not decided upon anything and do not have a timetable for when we might come to a decision," the spokeswoman said.
Toyota said in January that it would build a new low-emission diesel engine in Japan for its popular Yaris subcompact model being sold in Europe, and would introduce it to the European market through exports of Japanese-made Yaris from end-2001.
Toyota also said in January that from 2003 it would start assembling 30,000 to 40,000 diesel engines a year in its French plant and roll-out European-made diesel-powered Yaris cars.
The newspaper said Toyota would supply BMW with diesel engines from the French plant, offering a chance to reap a quick return on its investment in European diesel engine production.
Demand for diesel-powered cars has been rising in Europe as diesel engines emit less carbon dioxide than gasoline engines but Japanese automakers have been slow to focus on the eco-friendly vehicles, hurting their already limited sales in Europe.
Toyota, the world's third largest automaker, holds less than a four percent share of the European market, but has been making a bid to jack up its share through greater emphasis on diesel cars, local production, and tie-ups with European automakers.
In July, it entered into an agreement with PSA Peugeot Citroen to jointly develop and produce cheap compact cars for the European market from 2005.
The Yomiuri said BMW was also interested in the possible purchase of other diesel engines from Peugeot, which are being developed by the French company for the small cars to be produced jointly with Toyota.
Shares in Toyota ended Thursday morning trade down 4.41 percent at 3,250 yen, underperforming a 0.12 percent rise in the benchmark Nikkei average.
The shares of Toyota and other automakers were hit for the second consecutive day by worries that terror attacks in the United States may slam the brakes on the U.S. economy.
Toyota said yesterday it had no current plans to revise its forecasts, and it said that the three U.S. plants where it suspended operations for half a day on Tuesday had returned to normal operations on Wednesday.
Reuters
