The German luxury car group BMW and Fiat of Italy said on Tuesday they would explore the possibility of jointly producing platforms and components for their respective Mini and Alfa Romeo divisions.

A memorandum of understanding would outline conditions for the sharing of parts and production systems for the Mini and a compact Alfa Romeo model, explained Freidrich Eichiner, BMW's product development director.

Both sides agreed not to reveal additional details on their possible cooperation, a statement said, and results of their talks were expected to be presented by the end of the year.

Fiat chief executive Sergio Marchionne said the deal marked "a major milestone in the execution of our strategy of cooperation", and added that he was "delighted to work with such a respected partner".

The proposal would fit into BMW's already unveiled cost-cutting plan dubbed Number One that includes the elimination of 8100 jobs by the end of the year, around 7.5 percent of the German auto maker's total workforce.

The Munich-based group has been looking for months for partners on specific projects in order to reduce costs.

Since 2002, BMW has collaborated with the French group PSA on small motors used in Minis, Peugeots and Citroens.

It is also involved in a project with German rival Daimler on hybrid engines for limousines and has said it would like to extend the accord with Daimler's Mercedes brand to other areas.

Daimler boss Dieter Zetsche said early this year he was optimistic about the chances of reaching an accord with BMW.

Daimler is also looking for a partner with which it can produce parts and engines for small cars.

AFP