The two manufacturers will also co-operate on the development of lithium-ion batteries for next-generation electric cars as part of what Toyota refers to as a “mid- to long-term research collaboration”.
The signed Memorandum of Understanding will see Toyota borrowing 1.6-litre and 2.0-litre turbo diesel engines from BMW, allowing it to address a key area of weakness in Europe market where diesel-powered passenger cars account for more than half the market.
“The engines will be installed in certain Toyota-produced vehicles planned for sale in the European market,” said Toyota in a statement. “Through this agreement, Toyota plans to expand its European lineup and sales of fuel-efficient, low CO2-emission diesel-powered vehicles.”
In return BMW will gain access to Toyota’s hybrid technology as it expands its offerings of low-emission vehicles.
BMW has petrol-electric 7-Series and X6 models in limited availability and launched the ActiveHybrid 5-Series at this week’s Tokyo motor show, while it will launch the hybrid i8 sports car and the i3 electric city car in 2013.
“As we see it, both companies set the benchmark in complementary fields,” said Ian Robertson, member of the board of management of BMW AG, sales and marketing.
“Toyota has a wealth of experience to offer when it comes to battery technology. And the BMW Group has long been at the forefront developing some of the most technologically advanced clean diesel engines available.”
Toyota president Akio Toyoda said it was “a great joy and thrill” to enter into the agreement with BMW.
“In the spirit of contributing to furthering the development of the auto industry and society, both companies will bring their wide-ranging knowledge—starting with that concerning environmental technologies—to the table and make ever-better cars."