BMW will build the planned X1 compact sport utility vehicle in a European BMW plant, but outsource the Mini offroader to a third party, CEO Norbert Reithofer has told a news agency.

The move marks a switch in approach: the current larger X3 SUV is outsourced to Magna Steyr in Graz, Austria, who also helped with some of the development and production engineering, while the Mini models are all built in-house including the convertibles, a body type sometimes outsourced by European automakers to specialists such as Bertone and Pininfarina.

The decision to build the X1 in-house was due to the group's belief that the model's main market will be Europe, Reithofer told Reuters.

According to the report, Reithofer didn't say who might build the Mini SUV for BMW but the established relationship with Magna Steyr must make the Magna International unit a front runner.

By then, Magna Steyr's contracts to build the current European-specification Chrysler 300C and Voyager/Grand Voyager minivans will have ended and the unit is sure to be keen to secure new business to keep its assembly lines running at optimum volumes.