Mercedes-Benz may be close to a deal to develop new high-efficiency small engines with BMW for use in the next generation of small cars from both companies. BMW currently uses engines co-developed and built with PSA for the MINI. Mercedes-Benz, meanwhile, is trying to reduce the costs of their next generation A- and B-Class small cars. While Mercedes hasn't settled on what platform to use for those cars, the new engine partnership will at least be a first step. Both companies will have to dramatically reduce the fuel consumption of their next generation engines to meet proposed EU carbon-dioxide emissions limits.

[Source: Motor Authority]

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