Over recent months a collage of rumors surrounding a fourth brand under the BMW umbrella have been circulating, which may now be coming into clearer focus. With government fuel economy and emissions standards tightening both in the US and abroad, BMW, like other carmakers, is being forced to develop more earth-conscious vehicles to offset the fire-breathing monsters from their M division and the behemoths from Rolls-Royce.

The answer may be to go after arch-rival Daimler's smart brand, but rather than going super-modern, BMW is tipped to design its line-up of city cars around a retro theme. Isetta, which made tiny commuter cars in the 50's, has been touted as one strong possibility, more likely than the prospect of reviving Triumph into a smart rival when its roots are in roadsters. We reported on the Isetta rumor back in November, but according to AutoExpress, development of the new city-car is officially underway. Whatever badge the new BMW city cars would wear, insiders suggest that motivation would come from small turbocharged gasoline and diesel engines, while hybrids would be reserved for SUVs and other larger vehicles.

[Source: Auto Express]