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BMW and French automaker Peugeot Citroen have signed a new agreement to work together to develop a new generation of improved 4-cylinder engines. The new powerplants will be used in BMW's MINI lineup as well as in Peugeot's 207 and Citroen's C3 Picaso.

BMW recently made several changes to the 2010 versions of the engines in Europe, delivering improved power and fuel economy. MINI also did away with the smaller 1.4-liter four-cylinder in its MINI One and MINI First models in favor of a larger but more efficient 1.6-liter engine.

The new engine lineup is being created to meet Europe's upcoming 2014 “EU 6″ emissions regulations, and should deliver impressive fuel economy. Currently, the MINI Cooper achieves an impressive 28-mpg city, 37-mpg highway fuel economy rating in the U.S.

BMW and Peugeot Citroen also said the two automakers would look to work together in other areas, including production and development of select components.

BMW rival Mercedes-Benz is currently also engaged in talks with a French automaker, Renault, over a potential partnership on platforms and engines for a new line of small cars, including the next A-Class and B-Class.

More: BMW, Peugeot Citroen Extend Partnership to Build New 4-Cylinder Engines on
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