Saab has signed a deal with BMW to use the German companys petrol engines from 2012.
Under the agreement, BMW will supply to Saab a turbocharged four-cylinder 1.6-litre engine, which has been tailored to the Swedish companys requirements.
The engine which will be built at BMWs Hams Hall plant in the UK will be used in the next generation of Saab vehicles and feature Start-Stop and other measures designed to reduce emissions and fuel consumption.
Saab Automobile CEO Jan Ake Jonsson said: It gives me great pleasure to confirm this exciting new relationship. BMWs engines and their fuel-saving innovations are widely regarded as a benchmark in the premium segment. We look forward to integrating this technology into our next-generation vehicles in a true Saab way.
The companys chairman, Victor Muller, said: This is a major step for Saab on our road to becoming a profitable independent premium car maker. In line with our strategy, we will continue to capitalise on our own engineering expertise while also working with the very best partners. Both parties are open to explore further opportunities as part of this relationship in the future."