BMW LogoBMW’s finance director Michael Ganal has indicated to German magazine auto motor und sport that an engine collaboration between Mercedes Benz and BMW could be announced before Christmas this month.

BMW already has a successful collaboration with PSA Peugeot Citroen for the engine used in the second generation R56 MINI. This new partnership with Mercedes Benz could involve next generation small BMWs or MINIs and Mercedes Benz models such as the A-Class and the B-Class sharing a common drivetrain.