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Author`s name Alex Naumov

BMW and Mercedes to cooperate on small cars

BMW, the world's largest premium carmaker, and its closest rival, Mercedes-Benz, are in negotiations over a partnership to build subcompact cars, German motor magazine Auto Bild reported.

In July, the two companies are expected to make a decision on whether to build the next generation Mercedes A-Class on BMW's Mini platform, Auto Bild said in its forthcoming Friday edition without citing sources.

Heavy cost pressure means Mini runs the risk of losing money should its Oxford, England, plant not run at full capacity, so parent BMW is considering finding a partner.

Discussions could include Honda and existing partner PSA , and Mercedes, its arch-rival, as well.

Mercedes for its part planned on building the next A-Class in 2012 on a platform to be developed jointly with Chrysler, but these plans have been dropped after parent DaimlerChrysler's disposal of its majority stake in the loss-making U.S. carmaker.

BMW's sales and marketing head, Michael Ganal, suggested early last month in an interview with German business magazine WirtschaftsWoche expanding its current cooperation with Mercedes, which develops hybrid powertrains, into other fields as well, Reuters reports.

According to unnamed inside sources quoted by German magazine WirtschaftsWoche, the A-class is too expensive to produce and not profitable enough.

Mercedes has declined to comment. Only a few weeks ago M-B sales and marketing chief Michael Ganal said that the firm wanted to “increase cooperation” with rival BMW to enable it to benefit from shared research and development costs.

The A-class and its B-class sibling are the only front-drive models in Mercedes’ line-up. They use a sophisticated ‘sandwich’ platform that provides great interior space and crash protection, but isn’t cheap to make, reports.

Source: agencies

Prepared by Alexander Timoshik

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