MF Analysis: Saab’s Future with MINI Engines

This morning BMW and Saab announced that Saab will be using BMW powerplants in future front wheel drive Saab products. However thanks to various sources it’s become clear that Saab has not just signed an agreement to use BMW engines in future products but to use MINI’s current Prince range of engines in several products. We can confirm the first will be the 9-2 hatchback potentially followed by the next generation 9-3 family of vehicles.

But why would BMW give Saab the same engine range from the MINI for a car that will likely compete with it? Economies of scale would be a good reason. But we’re not so sure it’s that simple.

We know that 2013 will bring a new MINI hatch that will in turn bring an entire new MINI family of small cars. We also know that BMW is planning on using new three cylinder engines in this new range of products along with a new generation of FWD (and potentially even RWD) BMWs. So where does the Prince family of engines fit into BMW’s future plans?

We believe MINI will continue to use the Prince in the R58 Coupé, R59 Roadster and R60 Countryman (and other R60 derivatives) well into the second half of the decade. But the start of a transition to a new generation of three and four cylinder powerplants will begin in 2013 with the next generation MINI hatch and likely continue with the next generation Coupé, Roadster and Countryman line.

So what is Saab actually getting? It would seem that BMW is selling an engine on the back half of its lifecycle that won’t be in any BMW or MINI products after the 2018 model year. In short it’s a good sale for BMW. Proven technology but yesterday’s technology that is soon to be on its way out. And on Saab’s end it’s a good buy in that the Prince family of engines has a lot of life left in it. At it’s core there are few 1.6L engines that bridge the gap from efficiency to performance so well. And to develop an engine of this caliber from scratch would cost hundreds of millions of dollars. Something newly independent Saab simply doesn’t have.