BMW and Daimler have already started cooperating on parts purchasing, according to a senior BMW executive quoted in the German press.

Head of development at BMW, Klaus Draeger, told Germany's Auto Motor und Sport magazine that the company has already started talking to suppliers from which both companies source parts and sub-components, such as xenon light switching units, heat exchangers and air conditioning motors.

No one at BMW was available to comment when just-auto contacted them.

A firm agreement has not yet been reached but the companies are now looking in some detail at opportunities for joint purchasing, it's understood.

Earlier reports suggested that the two automakers expect to save EUR350m in the first year of their cooperation, and more in subsequent years. In particular, savings would come from reduced development costs and higher economies of scale.

BMW and Daimler already cooperate on hybrid drive development. They have reportedly been discussing the joint purchasing of parts for seat frames and heating, ventilation and air conditioning units.

Draeger also suggested that BMW and Daimler could cooperate on engines. "We are prepared, in principle, to sell our engines to competitors, and yes, we talk quite openly with Mercedes about opportunities for our engines.

BMW has been talking to a number of manufacturers about engines. The company held talks with Aston Martin about Aston using BMW's 12-cylinder engine but this did not come to fruition. Draeger suggested that GM, Chrysler and Ford might be interested in small passenger car diesel technology.

"If US manufacturers warm to diesel, we are happy to supply our high tech units to the US. We would have the right products for them and they could save a lot of development cost."

By the end of this year there could be an agreement between Alfa Romeo and Mini to cooperate. "We have signed a memorandum of understanding, and laid our cars on the table. The experts are now looking to see if there are synergies that can be exploited. We want to reach a decision about if and where there are opportunities by the end of this year."

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