BMW, PSA Expected to Let Engine Pact Lapse

BMW AG and PSA Peugeot Citroen are expected to phase out an agreement to co-develop small gasoline engines when the current pact expires in 2016, according to media reports.

An unidentified source tells Bloomberg News that the partnership, which began in 2002, has been made obsolete by BMW's own engine program and the potential for engine development under PSA's growing alliance with General Motors Co.

BMW and PSA said in June 2012 that they were mulling an end to their venture because of the French company's alliance with GM four months earlier.

Engines developed by the companies currently are used in BMW's Mini small cars and midsize Citroen and Peugeot models. The partners broadened the scope of their collaboration in 2010 to include larger 4-cylinder engine and hybrid powertrain components but abandoned the latter project last year.

BMW is now developing its own family of 3-, 4- and 6-cylinder engines.