BMW and DaimlerChrysler to build hybrids

• Tie-in to produce hybrid-drive for RWD cars
• Could see same motor in BMW and Mercedes
• System to be on sale in three years

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BMW and DaimlerChrysler, which owns Mercedes, have announced that they are to jointly develop hybrid-drive systems for their cars.

The systems they will develop are aimed at premium rear-wheel-drive cars, and the companies say that they intend to have hybrid cars on sale in three years.

It's most likely that we could see a new hybrid 7 Series first, although the system could have applications in the BMW X5 and Mercedes ML and E-Class cars.

The move allows the two companies to share technical expertise and gain greater economies of scale.

Tougher European Commission emissions targets have driven the German car manufacturers to seek ways to reduce the emissions, and hybrids are one of the quickest ways to achieve this.

Also, Toyota, which will become the world's largest car manufacturer this year, already has a substantial lead in the hybrid car market. Many of its Lexus models are direct competitors to BMW and Mercedes, and it already has hybrid models on sale in the premium car market - such as the GS450h and RX400h - and more are on the way.