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French-German engine project powers savings

BMW's partnership with PSA saves several hundred euros per engine, say sources

Paris. Little by little, new partners PSA Peugeot-Citroen and BMW are working toward their first major engine project.

Six months before regular production begins at PSA's Douvrin factory, both sides are enthusiastic about the partnership and the savings resulting from it.

The relationship with the German automaker has been "first-rate, warm-hearted and productive," said Daniel Marteau, the PSA director in charge of global joint ventures. BMW and PSA expect savings from the joint development and manufacture of the 1.6-liter-engine family.

"We have shared development costs," Marteau said.

The 60,000-square-meter (648,000-square-foot) manufacturing facility at Douvrin cost 330 million euros ($392 million).

Investment expenditures are being split based on the number of engines delivered to each carmaker, with PSA getting 80 percent of the production and BMW 20 percent. Even components from suppliers cost less due to higher volumes, Marteau said. PSA is responsible for parts purchases.

In addition, PSA can duplicate BMW technology. The company's Charleville foundry is using BMW's lost-foam process for large-volume production of naturally aspirated engines for the first time. The lost-foam method costs 15 percent less than conventional mold processes.

BMW is profiting as well.

"We are seeing great potential in the cost area," said Guenter Klamer, BMW's manager for drivetrain and chassis systems.

Sources in BMW development said the engine deal is saving the company several hundred euros per engine.

Assembly at Hams Hall

PSA is planning to put the 1.6-liter engines in small and mid-sized cars, including the Citroen C4 and Peugeot 307. BMW is putting the engines in its next-generation Mini Cooper, due out in fall 2006. Sources said annual output will reach 1 million units in 2007.

The performance of the naturally aspirated and turbocharged engines will range from 75 horsepower to 170 hp.

PSA will use the engine in 20 models between 2006 and 2008. Marteau said PSA has no plans to sell the drivetrains to other carmakers.

About 1,210 employees on four shifts will work on the engines at Douvrin. The plant will have trucks deliver components to the facility just in time, avoiding the need for warehousing.

PSA uses high-speed processing centers to guarantee quality. Any flawed parts are immediately thrown away. For cost reasons, there are no plans to rework them.

BMW is getting separate components rather than complete engines from PSA. Beginning in 2006, BMW workers will assemble the engines at Hams Hall in the U.K. The Hams Hall site is 120 kilometers (74 miles) from the Mini assembly plant in Oxford.

BMW sources said the diesels for the next-generation Minis will come from PSA instead of current provider Toyota because PSA's HDi engines have more performance potential.

"So far, we haven't sold diesels to BMW, but why not?" said Marteau. "We would be happy to."

Tags: Automakers BMW

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