bmw_logo2.jpgPSA/Peugeot-Citroen already collaborates with BMW on small gas engine technology, but the French automaker is looking to expand its relationship with BMW into co-developing vehicle components and leveraging purchasing power.

PSA/Peugeot-Citroen CEO Phillipe Varin revealed to Automotive News that he is holding talks with BMW CEO Norbert Reithofer to discuss a deeper relationship between the two automakers. The talks reportedly hinge around joint-development of transmissions and climate control systems – as well as leveraging of purchasing power – but the automakers are also discussing further engine sharing.

“We have set up groups of experts to work on deepening our cooperation on gasoline engines,” Varin told Germany’s Handelsblatt.

PSA and BMW’s MINI brand currently share a 1.6L four-cylinder gas engine, but BMW might also adopted PSA’s forthcoming three-cylinder engine, set to hit the market in 2011. In exchange, PSA could source gas engines for its larger vehicle offerings from BMW.