Mercedes-Benz In Talks to Source Four-Cylinder Engines from BMW By 2027?

Mercedes-Benz is exploring a landmark deal to purchase four-cylinder petrol engines from rival BMW AG as early as 2027, according to a report by Manager Magazin and detailed by BMWBLOG. The proposed alliance marks a strategic pivot for Mercedes CEO Ola Källenius, who has been grappling with margin pressure and dwindling unit sales this year. 

Why Mercedes Needs the Deal

At the close of the second quarter of 2025, Mercedes recorded automotive margins of just 3.2 percent and saw first-half sales fall to 900,000 units—the lowest level since 2020. Källenius warned that cost-cutting alone will not reverse the slide unless Mercedes can field competitive new models. One urgent shortfall has been combustion-engine units for its expanding plug-in hybrid lineup. Earlier efforts to source four-cylinder blocks from Geely in China ran afoul of political sensitivities in key markets such as the United States. 

Details of the Proposed Arrangement

Discussions between Källenius and BMW CEO Oliver Zipse began nearly a year ago, according to insiders. Technical teams led by Markus Schäfer of Mercedes and Joachim Post of BMW have since been hashing out the framework. Under the tentative plan, BMW would channel its B48 petrol four-cylinder engines—produced at its Steyr, Austria facility that churned out over one million power units in 2024—to Mercedes assembly lines starting in 2027. Joint production in the U.S. to sidestep import tariffs is also under consideration. 

A First for Direct Rivals

While BMW already supplies powertrains to boutique marques such as Morgan and Ineos, as well as volume brands including Land Rover, Range Rover, and Toyota, this would be the first time BMW engines find their way into Mercedes vehicles. Historically, Mercedes has developed virtually all its own engines in-house; no prior arrangements have seen it purchase BMW units. 

Potential for Expansion

Although initial talks center on the petrol B48, insiders suggest the B47 diesel may follow suit if the alliance proves successful. Details on which Mercedes models might debut with BMW underpinnings remain under wraps, though the first batch is likely to appear on plug-in hybrids and entry-level sedans in key regions.

A New Chapter in Collaboration

For Mercedes, turning to a longtime competitor underscores a more flexible stance toward combustion-engine sourcing even as it accelerates electrification. For BMW, adding Mercedes to its roster of engine customers would bolster production volumes, revenue, and reinforce its reputation for engineering excellence. Both companies are expected to issue statements in the coming months as negotiations advance.