Peugeot could have engine pact with BMW, Mercedes

PARIS (Reuters) -- Europe's second-biggest volume car maker, PSA/Peugeot-Citroen, does not exclude partnering with both BMW and Mercedes to develop a new generation of petrol engines.

CEO Christian Streiff was asked by Germany's Die Zeit weekly newspaper whether such a cooperation was possible. "I won't exclude that," he told the paper's edition today.

A spokesman for PSA said that there were no ongoing talks.

PSA and BMW have a long-standing cooperation pact in petrol engines and BMW CEO Norbert Reithofer told Reuters last week he was open to developing engines jointly with rival DaimlerChrysler.

Daimler CEO Dieter Zetsche has made similar remarks.

"PSA/Peugeot-Citroen is the volume car maker with the largest number of cooperation pacts and Mr Streiff has said he wants to deepen the existing partnerships," the spokesman said.

"With BMW we have a specific and durable pact on petrol engines," he added.

PSA is "constantly working" on developing a new generation of petrol engine with lower fuel consumption and lower emissions of greenhouse gases, he added.

A new engine plant investment is usually of the size of $1 billion and a partnership can spread both the total costs and the cost per engine.