BMW, Toyota, and diesel

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We are now joining forces to further develop environment-friendly technologies and to expand our innovation leadership in each of our segments.” –Norbert Reithofer, chairman of German automaker BMW, on the company’s recent alliance with erstwhile Japanese competitor Toyota

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As is well known on this side of the pond, Japanese automaking juggernaut Toyota has been building up a light truck presence for many years now in the pickup segment with its Tundra model – a fine vehicle, to be sure, but one that lacks that critical option common to its rivals from Ford Motor Co., General Motors, and Chrysler: the diesel engine.

Though Toyota made noise several years back about developing a diesel-powered Tundra model, the company ended up quietly spiking the idea for reasons of its own.

Now, a newly-minted development partnership forged with Germany’s luxury car maker BMW may – and I say “may” here with an awful lot of uncertainty – revive the potential for a diesel powered Toyota trucks for the North American market, though any such occurrence would at best still be many years off over the horizon.

The reasoning behind this admittedly long-range guesswork stems from BMW and Toyota’s “memorandum of understanding” signed earlier this month to collaborate on “next generation” powertrain technology, with includes joint work on lithium-ion (li-ion) battery technology for hybrid-electric vehicles.

The deal also means that, starting in 2014, BMW will supply Toyota's European subsidiary – Toyota Motor Europe – with BMW's latest generation of 1.6-litre and 2.0-litre diesel engines. Consulting firm IHS Global, which tracks the world’s automotive market very closely, said these diesel engines will be fitted to “unspecified” Toyota models in the European market, but are most likely aimed at the C-segment Auris, MPV-C Verso, D1-segment Avensis and SUV-C RAV4.

“This is potentially a very valuable collaboration for both parties and it could end up evolving into a significant partnership which substantial benefits and synergies,” noted IHS in a research brief. “There is little in the way of crossover and competition between BMW and Toyota. And if Toyota models … are suddenly available with diesel powertrains, their appeal is likely to be considerably broadened, as is no doubt Toyota's intention.”

[Here’s a look at BMW’s diesel engine technology.]

With new European Union (EU) emissions regulations coming in 2012, IHS said this diesel engine supply contract could be seen as a move by Toyota to further lower the carbon dioxide (CO2) emissions for the company's European model range. This would ensure that by 2014 and 2015, by which time 80% and 10% of the range will have to meet the 130 g/km (grams per kilometer) emissions limit, Toyota should be in the firm’s estimation, “will be very well prepared to meet these targets.”

Of course, IHS added, Toyota’s access to such diesel engine technology will not come cheap. However, as well as a hefty supply contract fee, BMW is set to benefit from what the firm calls “huge” research and development (R&D) synergies on developing its next generation future powertrain technology in the area of electric vehicles (EVs), hybrids and presumably fuel cells.

“For a company of BMW's size, and one which fiercely guards its independence, this is a major boon,” IHS said. “R&D for this technology is extremely expensive and developing successive generations of EV and hybrid technology on its own would have been a significant draw on BMW's resources. Combined with Toyota the two companies' technological know-how will from a formidable R&D capability in this area as well as introducing significant synergies and cost-savings.”

OK, for sure, such thinking is highly speculative at best and the diesel engines we’re talking about here are small-block powerplants for cars – and for cars pegged only to the European market at that.

But as both Toyota and BMW are global manufacturers and both need scale to help lower the cost of making their vehicles, it’s not so farfetched to see them try and expand that diesel footprint to other markets – and the U.S. would be a natural segue for them both.

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