At the end of November, BMW and Toyota Europe announced they had entered into a green engine partnership in order to work together on diesel engine and battery technology. 

At the time, we pointed out the European-based collaboration was unlikely to result in any new drivetrain options for U.S. cars. Now both firms have confirmed that Toyota’s luxury brand Lexus won’t benefit from the deal either 

“The agreement with BMW does not include any supply of BMW engines to Lexus,” Toyota Europe spokesman Etienna Plas told Automotive News, while BMW’s development chief Klaus Draeger  said that the engine deal with Toyota wouldn’t affect sales of BMW cars. 

“We don’t have any concerns,” he told the German business magazine Wirtschafts Woche. “The engines are not planned for use in the Lexus brand.”

But why? And why would BMW be keen to not extend the deal with Toyota to include Lexus? 

BMW diesel hybrid likely to feature in next-gen 5-series

BMW diesel hybrid likely to feature in next-gen 5-series

It’s all down to the competitive relationship between the two brands in the luxury and premium car segments.

In Europe, BMW accounts for 4.7 percent of the market share, while Lexus accounts for just 0.2 percent. By allowing Lexus to use its clean diesel technology, BMW could potentially weaken its market share. 

In the U.S., where clean diesel cars account for just 3 percent of the new car market, a clean diesel Lexus isn’t financially viable. And with BMW occupying a smaller market share in the U.S. compared to Europe, the European brand needs to work extra-hard to ensure its market share isn’t eradicated by the more popular Lexus.


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