Fiat is set to announce tomorrow that it is to form an alliance with BMW to develop a new small car platform that will underpin the next-generation Grande Punto and Mini while new petrol and diesel engines are also being discussed.

Fiat Group is set to announce that it is to form an alliance with German carmaker BMW to develop a new small car platform that will underpin the next-generation Grande Punto and Mini while new petrol and diesel engines are also being discussed. The news was reported this morning by Automotive News Europe who quote 'supplier sources' for the information.

The news comes just as Fiat CEO Sergio Marchionne revealed at this morning's 500 Abarth launch that an announcement regarding a new alliance would be made tomorrow (Wednesday) evening. "Tomorrow, we will probably announce an industrial alliance in auto with a foreign partner, that we have been working on for a fair time,' Marchionne told reporters, "It's something simple," he added.

Fiat and BMW have been locked together in talks for sometime, with the focus being on the compact end of the market. Fiat has also had discussions with Mercedes-Benz over using the Grande Punto platform for its next A/B-Class models, although these reportedly came to nothing. Completing the circle: at the same time BMW has held small car platform sharing talks with its German rival who were interested in the Mini platform's technology.

Marchionne has targeted specific alliances as being a key plank in his strategy to take the Fiat Group forward since becoming CEO and the co-operation agreements he has already signed with other carmakers include Ford, Suzuki, Chery, Sollers (Severstal), PSA Peugeot-Citroën (which also has an engine alliance with BMW) and Tata Motors. Now BMW is expected to be added to this expanding list, and for the German firm it will offer access to Fiat's compact car technology, an area which ii needs to develop, especially as ever tightening European Union legislation, along with soaring oil prices, is forcing all carmakers to develop smaller and more efficient cars and engines.

ANE specify that the agreement between Fiat and BMW will focus on developing a new B-segment platform that will be used to underpin the next generation Fiat Grande Punto and BMW's third-generation Mini. The next Grande Punto isn't part of Fiat's currently outlined product schedule which runs up to the end of 2010, so 2011 would be the earliest date for its launch, with the next version of the Mini expected to be introduced around a similar time. ANE also says in its report this morning that talks are on-going between the two firms to explore developing a new family of petrol and diesel engines.