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Talks between BMW and Hyundai could result in the availability of replacement car engines developed jointly by the two manufacturers.

According to reports from Reuters, the German and South Korean carmakers are currently discussing a possible tie-up which would see them develop engines and possibly other car parts together.

BMW and Hyundai deal

Co-operation between BMW and Hyundai may result in a joint engine develpment. Earlier this week, German industry newsletter Automobil Produktion reported that BMW had approached Hyundai with a deal which would see the latter share the €1 billion - €2 billion cost of developing new engines.

This was later refuted by a Hyundai spokesperson, however.

But now it seems that the deal could be back on after a source with direct knowledge of the subject told Reuters discussions between the two manufacturers were taking place.

"The talks are at early stages," the source said on condition of anonymity.

Another source familiar with the discussions said that BMW and Hyundai had mooted the possibility of a "comprehensive alliance", which would involve jointly developing an engine with costs split evenly between the two.

A cooperation deal could prove useful to both companies - allowing them to benefit from the cost savings associated with economics of scale, as well as pool their collective engine technology expertise.

Meanwhile, BMW announced this week that it has recorded its best-ever first-quarter results in terms of cars sold.

In the first three months of the year, the BMW Group, which includes the Mini and Rolls Royce brands, sold 425,000 cars, boosted by a surge in sales in China.

Luxury car brands such as BMW have benefited significantly from the rapid growth in the number of newly wealthy Chinese in recent years.

China was the manufacturer's best-performing market in the first quarter of 2012, ahead of the US and Germany for the first time.

"The premium segment in China will continue to offer positive growth opportunities," predicted Dr Norbert Reithofer, chairman of BMW AG.

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