BMW Out of Tritec Engine JV

BMW AG has sold its 50% holding in Tritec Motors Ltda. to partner DaimlerChrysler AG’s Chrysler Group, ending a 7-year relationship with the Brazil-based engine joint venture.

Financial terms were not disclosed.

It is unclear whether Chrysler will continue to hold on to Tritec or look to sell the operation’s 4-cyl. engine tooling. Russia’s OAO AvtoVAZ and OAO GAZ and China’s Chongqing Lifan Industrial (Group) Co. Ltd. all have expressed interest in acquiring the equipment to build Tritec’s 1.4L and 1.6L 4-cyl. engines. Lifan already buys Tritec engines for use in its 520 car.

While the Chinese would be expected to move the tooling to China, the Russian auto makers have proposed purchasing Tritec together and keeping the operation in Brazil.

Tritec’s biggest third-party customer is China’s Chery Automobile Co. Ltd., which imports the Brazilian-built 1.6L for installation in its A15 and Fengyun models.

Tritec opened in 1999 as a JV between BMW and Chrysler Corp., with the mandate to supply engines for the Dodge Neon small car and BMW’s Mini model. But soon after, Chrysler was acquired by BMW rival Daimler-Benz AG and the small-engine partnership immediately went sour.

BMW has publicly complained about the performance of the Tritec engines and did not renew its supply contract when it expired in January. The German auto maker recently launched a new 1.6L for its revamped Mini coupe that went on sale in the U.S. in February. That engine is being produced in a JV with PSA Peugeot Citroen.

At the media launch for the new Mini, Erich Sonntag, BMW product manager-Mini engine family, told Ward’s the Tritec’s Pentagon 4-cyl. proved inadequate and said BMW would have had difficulty meeting upcoming emissions regulations in Europe and the U.S. with the existing engine.

“It was a very old-fashioned engine, cast iron and only one camshaft but four valves per cylinder, so there is no flexibility on valvetrain,” Sonntag told Ward’s. “This engine was just a very cheap engine, but also not very effective on function, performance and fuel (efficiency).”

The Mini convertible, which remains on the car’s original platform, continues to use the Tritec engines.