“We will be extending the BMW and MINI brands into the small car segment with new models and variants,” said Mr Reithofer.
The news confirms last month's speculation that a smaller BMW-badged model is in the pipeline, and comes as BMW finds global research shows a strong demand for a premium small car, similar to the newly announced Audi A1.
The as yet unnamed small BMW will share many components familiar to both the current 1 Series and popular MINI range, including the next-generation MINI's engine and front-wheel drive system. BMW says this decision helps them realise the economies of scale with its small vehicles.
BMW has not yet released full specification and pricing details of the sub-1 Series car, but did indicate timing may be fast-tracked to retain the manufacturer's lead in the segment. This should mean we see the small BMW before the release of the new MINI which is due to hit showrooms in 2014.
A BMW representative also said that rear- and all-wheel drive variations of the small car "aren't totally out of the question, but they likely won't be available at launch".