The future of DaimlerChrysler’s Brazilian-built engine in the Mini appears under threat following an announcement today that BMW Group and PSA Peugeot Citroën are jointly developing and making a new family of petrol engines.

Peugeot, Citroën and future Mini variants will be equipped with engines from the co-operation project.

BMW’s R&D department will be in charge of designing the engines, and the common project team will be based in Munich.

PSA Peugeot Citroën will manage process development, engineering for production as well as procurement. The production capacity will meet the future needs of Peugeot, Citroën and Mini vehicles and could reach up to 1,000,000 units a year.

The two companies said the co-operation calls for expertise in automotive technologies and the ability to manage large-scale production and expect it to generate economies of scale while meeting both partners’ segment-specific petrol engine requirements.

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PSA and Toyota are jointly developing a range of small city cars to be built in the Czech Republic and BMW recently announced it would buy Mini diesel engines from Toyota.