The engine in question is currently being developed for the upcoming baby Porsche Boxster which will enter the market as the cheapest and smallest Porsche sports car. According to the rumours, Alfa Romeo could receive direct assistance from Volkswagen and Porsche in the form of this engine supply but the Italian marque has rejected the offer.
Volkswagen has openly expressed its desire to buy Alfa Romeo from Fiat but Fiat boss, Sergio Marchionne, is standing firm. Marchionne has said, "As long as I am CEO of Chrysler and Fiat, Mr. Piech will never have Alfa Romeo."
Even so, the German company is apparently insistent on pursuing the Italian marque and is ready to shoehorn the new flat four into upcoming Alfa models. A Fiat spokesman recently told Autocar in the UK, "We shut the door in their [VW’s] faces and now they’re trying to get in the window."
It's all a part of Volkswagen's plan to be the biggest automotive manufacturing group by 2018. Company Chairman, Ferdinand Piech, recently announced to the automotive press that Volkswagen could quadruple current Alfa Romeo sales if it could acquire the marque.
It is all just a rumour at this stage though. It might be a long shot, but we'd certainly welcome the idea of Alfa returning to its roots and bringing out a boxer-engined Alfa, like the old Alfa Romeo 146, 33 and Alfasud.