BMW would provide Toyota diesel engines in exchange for hybrid technologies from the Japanese automaker.

BMW and Toyota are working on a deal to share engine technologies, according to a new report.

The Detroit News writes that a report by J.P. Morgan's Tokyo office states that BMW and Toyota are working on an agreement where BMW would provide Toyota with diesel engines in exchange for hybrid technologies from Toyota - the maker of the top-selling hybrid range, the Prius.

The deal works to both automakers' advantage as Toyota could sell more diesel units in Europe and BMW can share expensive development costs on hybrid drivetrains by obtaining technology directly from Toyota, the world's leading automaker of hybrid vehicles.