DOUVRIN, France -- PSA/Peugeot-Citroen SA financed 80 percent of the $520 million investment for a new gasoline engine family that it will share with BMW AG.
Included is $400 million for a new assembly building at PSA and Renault's Francaise de Mecanique joint engine plant here. The other $120 million includes investment in other plants that supply the Douvrin plant.
PSA's greater financial burden is in line with the larger percentage of engines it will get from the joint project.
The r&d costs for the engine, which amounted to about $218 million, will be split.
Technological advances will be "100 percent shared," says Guenter Klamer, BMW's senior vice president for powertrain and chassis systems.
Klamer says the four-cylinder engines will be tuned differently for PSA and BMW.
"Mini engines will be tuned for sporty driving, and they will conform to the habits of American drivers," he says.
BMW was responsible for the development of the 1.4- and 1.6-liter engine family, which is known as the Prince. PSA is in charge of purchasing and production in the Douvrin plant. Mini engines will be assembled at BMW's factory plant in Hams Hall, England.
About 1 million engines annually will be fitted in small and mid-sized PSA models, starting with the Peugeot 207 small car in October 2005, and in the next Mini, due in the fourth quarter of 2006.
"We discussed designing the engine in a way that would make it possible to fit it in BMW models, too," a BMW source says.
BMW and PSA decided against that to keep down production costs, says the source, but the engine could be transformed for use in a rear-wheel-drive platform.
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