Hyundai and BMW have reportedly held talks over a potential deal to collaborate on research and development of engines and other vehicle components.

An unnamed source told Reuters the talks are in “early stages” and confidential in nature, supporting another source who claims that the South Korean and German companies have previously discussed a comprehensive partnership to develop an engine and share the costs equally.

The rumours gained weight last week after German industry journal Automobil Produktion reported that Chung Eui-sun, the heir apparent of Hyundai Motor Group chairman and the son of the current chairman, had met with senior BMW officials in Munich to discuss the potential deal, which the paper suggested could be worth as much as two billion euros ($2.6 billion).

Both companies have been quick to pour cold water on the claims, however. Hyundai officials in South Korea last week told CarAdvice the reports of a collaboration were groundless, while BMW CEO Norbert Reithofer told reporters additional cooperation partners for his company were not currently foreseen.

BMW already collaborates on its engines with PSA Peugeot Citroen and recently signed a deal with Toyota that will see it supply the Japanese car maker with 1.6- and 2.0-litre diesel engines from 2014 in return for commitment to a partnership to develop next-generation EV battery technology together.