Fiat Group is in talks with BMW about supplying engines, gearboxes and components, the German carmaker has admitted, with a decision set to be made by the end of the year.

Fiat Group is in talks with BMW about supplying engines, gearboxes and components, the German carmaker has admitted, with a decision set to be made by the end of the year.

The confirmation came from Automotive News Europe, who posed a question to Friedrich Eichiner, BMW’s board member for corporate and brand development, as to whether the German brand was talking to Fiat, along with two other carmakers, US giant General Motors, and its arch domestic rival Daimler AG. "We are talking with those companies you mentioned,” Eichiner told ANE.

He also revealed that a decision on whether to supply engines and other components to Fiat will be made before the end of the year. "It does not make sense to go on talking and talking forever," Eichiner said.

This is the first time that any party has confirmed that talks are talking place between Fiat and BMW. The story first surfaced at the end of February in Financial Times Deutschland, the newspaper claiming that discussions between the two carmakers, as well as with GM and Daimler, were being held in regard to the supply of engines, gearboxes and other components, although neither Fiat nor BMW would confirm at the time that this was the case. This followed reports in the German media earlier that month that BMW was considering supplying its technology outside the company.

BMW has made it a priority to boost its corporate profits, after coming under pressure from shareholders to turn in higher returns. BMW CEO Norbert Reithofer is drafting a strategy to develop this area, and supplying engines and components to its rivals would raise revenue as well as reducing costs, important as all the European carmakers struggle to absorb the higher outlay in spending required to reach ever tightening EU emissions legislation.

Fiat CEO Sergio Marchionne has made signing targeted deals in specific areas a cornerstone of his bold plans to revive the fortunes of the Fiat Group, and the Italian firm currently has deals in place with an array of other global manufacturers, including Ford, Tata Motors, Suzuki, Severstal-Avto and PSA Peugeot-Citroen. Last year Marchionne was involved in abortive platform sharing talks with Mercedes-Benz owner Daimler AG, while in February media reports suggested talks between the two were going on again, this time focusing within the area of components.