PSA & BMW WILL CONTINUE THEIR PARTNERSHIP

PSA Peugeot-Citroen and BMW will probably end cooperation on small gasoline engines when the project agreement lapses in 2016, a person familiar with the matter said.BMW no longer needs the partnership because the automaker is developing its own engines, while PSA is tightening ties with General Motors Co. in a broader alliance, said the person, who asked not to be named as the talks aren't public.

The comments came as the French business newspaper Les Echos reported today that the carmakers plan to end the partnership.The program's expiration would bring to an end joint work that started in 2002, when BMW and PSA agreed to develop and produce as many as 1 million small gasoline engines. They added plans later to make components for hybrid electric-gasoline systems.

The hybrid portion unraveled last year after PSA and GM started setting up their partnership in early 2012.The jointly produced engines are used in BMW's Mini small cars, Peugeot's mid-range vehicles and the Citroen brand's DS4 and DS5 models. The partnership was expanded in 2010 into four-cylinder motors.The German company is developing its own architecture for three-, four- and six-cylinder gasoline and diesel engines. BMW CEO Norbert Reithofer was cited in July by German financial daily Boersen-Zeitung as saying the engines will also be used in the Mini.

PSA-GM alliance
Representatives for PSA and BMW declined to comment beyond reiterating previous statements that the combustion-engine program will continue until 2016. PSA's alliance with GM includes a joint venture for parts procurement in Europe and the development and production of cars that the manufacturers plan to begin selling in 2016. The U.S. carmaker now owns 7 percent of its French counterpart under the partnership.

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