Saab could use BMW and Mini engines to power its next generation Saab 9-3 and new 92, according to Autocar sources.
Other unconfirmed reports also suggest that the deal between BMW and Saab could extend to Saab building its 9-2 on the Mini platform - something that would appeal to Mini as it attempts to increase volume and cut costs.
It's thought that as early as last summer Saab had its eye on the highly regarded 1.6-litre turbo petrol and turbodiesel units used in the Mini, and reports from Sweden now suggest the deal is done.
The company is keen on what it calls 'right-sized' engines, which it can modify using its extensive experience in turbocharging and engine management technology.
The sources now say that BMW and Saab have already signed an agreement for the Swedish company to buy in the new BMW-derived diesel and petrol engines that are set to make their debut in the forthcoming Mini Countryman.
If true, the deal could include the new 184bhp 1.6-litre, twin-scroll turbo Cooper S engine and the 112bhp 1.6-litre diesel engine used in the Countryman.