Mercedes and BMW consider Rolls-Royce link

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MERCEDES and BMW, the German motor rivals, are negotiating with Rolls-Royce with a view to helping the British luxury car maker to develop its new model, writes Russell Hotten.

The German companies confirmed yesterday that they were in talks. They are believed to be keen to collaborate, rather than merely supply components. Such a deal could help Rolls to cut the huge cost of developing a new model, estimated at pounds 200m.

Rolls, a subsidiary of the Vickers engineering company, has had talks with Mercedes about the purchase of V12 engines and other components. A spokesman for Mercedes ruled out buying an equity stake in the UK car maker.

BMW, which owns Rover Group, supplies body panels to Rolls. A spokesman said there were no plans to invest in Rolls-Royce.