FRANKFURT (Thomson Financial) - Bayerische Motoren Werke AG and DaimlerChrysler AG's Mercedes-Benz may well be in talks right now to explore possible areas in which they could cooperate as carmakers ponder how to share the very high R&D costs in making more eco-friendly cars, analysts said.
Both companies have been coy about saying anything on expanding an existing technical alliance and DaimlerChrysler would only say in general terms that joint ventures and cooperations are welcome if they make sense.
'But I am pretty sure they are talking behind closed doors already,' according to one car analyst who declined to be identified.
Another German car analyst who requested anonymity said sharing components and engines may well be among possible areas of cooperation but a major issue the two would have to thrash out is how to preserve the Mercedes and BMW brands.
The trade magazine Auto Bild has previously reported that the two are in talks to cooperate on making a compact car based on BMW's MINI model.
BMW development head Klaus Draeger has also told trade magazine Auto Motor und Sport in July that his company plans to expand its cooperation with DaimlerChrysler and Peugeot to include development of gearboxes and engines.
BMW and DaimlerChrysler currently have a tie-up on joint development of hybrid engines.
BMW is currently undergoing a strategy review on what it plans to do in the next ten years as rising revenues fail to feed through the bottom line and profit margins decline in the face of a strong euro and rising costs to develop technologies that emit less pollutants from cars.
The results of the strategy review will be unveiled in October.
Some analysts said as part of this examination on how to boost profit margins in the next decade, BMW may well be also considering the option of buying Volvo passenger cars from Ford Motor Co - though most say an acquisition would be the last possible thing the German carmaker would do at this time.
Ford said in late July that it was talking to selected parties about Land Rover and Jaguar and that it had begun a strategic review of Volvo -- its first public acknowledgment that it wanted to shed the Swedish carmaker, which it bought in 1999.
Some US media reports have said Ford is hoping to sell Volvo by end of the year.
BMW said today it is not interested in buying Volvo.
Automotive analyst Tim Schuldt of Equinet said if BMW is interested in Volvo, it would be expected to keep its cards close to its chest. 'It's difficult to say what's happening right now. If they show too much interest, they might spoil the price,' he said.
Christian Nagstrup, analyst at Danish bank JYSKE Bank, said it would make sense for BMW to acquire Volvo but an acquisition would be the last option the German carmaker would consider.
'BMW was burned before when it comes to acquisitions. I wouldn't rule out BMW making an acquisition but it could impose a heavy financial burden,' he added.
BMW bought Rover in 1994 in a bid to expand into the mass volume segment but had to take losses due to the strong sterling. After a strategy review that concluded the company would stick to making only premium cars, it sold Rover in 2000.
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