Toyota signs engine deal with BMW

5 December 2011

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5 December 2011 | Adam Leach

Toyota has signed an agreement with rival automotive manufacturer BMW to buy 1.6 and 2.0 litre diesel engines for the manufacture of hybrid cars.

The “supply and development” deal between the two companies, which is part of a wider collaboration, will see Toyota begin receiving the engines in 2014. While Toyota - which manufactures the Prius hybrid vehicle - is not ready to reveal which models the engine will be used in, it stated that its European manufacturing plants would receive the engines.

In a speech announcing the collaboration, Didier Leroy, president and CEO of Toyota Motor Europe, suggested the companies would look to expand the deal to benefit from economies of scale by combining their buying power. He said: “By working together with an industry leader like BMW, we think we can do this [manufacturing hybrid cars] more efficiently, realising improved scale, reduced development costs and quicker speed to market.”

The collaboration will see them take advantage in areas where they are looking to develop. BMW will use it to further its expansion into “sales activities for engines” while Toyota will be able to put BMW’s engines into its cars, which are the highest selling in volume terms.

Norbert Reithofer, chairman of the board of management at BMW, said: “Supplying Toyota with our fuel efficient and dynamic diesel engines represents another important step in the planned expansion of our sales activities for engines and powertrain system.”

The deal with Toyota is the latest in a line of deals that BMW have made with competitors. Since 2008 it has teamed up with fellow German carmaker Daimler to negotiate better prices on purchasing raw materials. Earlier this year it set up a joint venture with PSA Peugeot Citroën to joint purchase car components for hybrid models.

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