Toyota Motor Corp. is in final talks with BMW to supply the German car maker with diesel engines for use in a subcompact model [widely expected to be the newly launched MINI], Associated Press reported, citing the Nihon Keizai newspaper.

AP quoted the financial newspaper as saying that Toyota may begin supplying a newly designed 1,400 cc diesel engine to BMW as early as next year, and later increase its annual supply of the engines to 30,000 units in 2003. The report did not specify figures for 2002.

BMW officials in Britain recently told just-auto that the new Mini would be available with a Toyota diesel engine from next year. They could not confirm that the engine would be a new design similar to a unit due to appear in European versions of the Yaris expected on sale by the end of the year.

Toyota is set to supply diesel engines to BMW for use in the new Mini

Last week, the Financial Times newspaper reported that Toyota and BMW were talking about diesel engine supply. The paper quoted BMW worldwide production head Norbert Reithofer as saying the bought-in engines would be used for 30% of Mini production.

The Mini will be launched in Europe, home to the strong diesel markets of France and Italy, in September.

AP said that Toyota officials were not available to comment on the Nihon Keizai report because today is a national holiday in Japan.

The newspaper said that Toyota and BMW were finalising details such as the price of the diesel engine, which was originally developed for Toyota’s European Yaris, AP added.

The report also said that Toyota will spend about 20 billion yen ($US161 million) this year to refurbish a production line at its Kamigo, central Japan plant for mass production of the diesel engines, the report said.

Toyota and Peugeot also recently announced a European joint venture to develop and produce a new range of small cars, sized and priced below the Japanese company’s Yaris and the French firm’s Peugeot 106 and Citroen Saxo.

To view related research reports, please follow the links below:-

The world’s car manufacturers: A financial and operating review

Diesel Engines & Parts to 2003