Toyota Motor Corp. and BMW AG are reportedly in the final stages of negotiations over a deal that would see Toyota supply diesel engines for the German automaker's Mini line, according to a report in the Japan Times.

The deal would be something of a landmark for Toyota as it would be the first time the carmaker has supplied diesel engines to a company outside its group.



In recent years, Toyota has sunk considerable investment into the development of compact diesel engines. Supply deals with outside companies will help amortize that investment.

The report also says that Toyota is considering supplying the German firm with a modified version of a 1,400cc diesel engine featured in the Toyota Yaris, a compact manufactured in France.

Under the reported plans, Toyota would supply BMW with between 20,000 and 30,000 diesel engines annually, beginning in 2002.

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