BMW AG (BMW.XE) executive board member Klaus Draeger said Tuesday the world's biggest premium automaker aims to sell more engines to other automakers to generate additional revenue.

"Engine technology is one of our core strengths, and we want to grow further in this market," Draeger told Dow Jones Newswires in an interview at the Geneva auto show.

Automakers around the globe are squeezed by deteriorating demand for cars, increasing the pressure to create additional revenue outside their core business of selling vehicles.

BMW currently supplies engines to some niche carmakers such as Wiesmann and also supplies boat engines in the 170 to about 300 brake horsepower range.

Draeger said the Munich-based automaker is still in talks with Italian automaker Fiat SpA (F.MI) over possible cooperation projects. He said, however, that plans for a joint production platform for compact cars have been abandoned.

In July, BMW and Fiat signed an agreement on possible cooperation and component sharing for their Mini and Alfa Romeo brands aimed at reducing costs. A decision was initially expected to be made by the end of last year, but faced a delay as talks proved to be more complex than expected.

Fiat Chief Executive Sergio Marchionne at the time described the proposed cooperation with BMW as a "significant cornerstone of our strategy of alliances."

Draeger said BMW sticks to its target of keeping its capital expenditure in a range between 5% and 5.5%, which is part of a wide-ranging program dubbed Number One initiated to enhance the company's efficiency. BMW's capex ratio in recent years often exceeded 6% as BMW traditionally invested heavily in research and development.

"We've launched more new models while at the same time investing less...This shows that we made major progress in improving our efficiency," Draeger said.

German peer Daimler AG (DAI), the maker of Mercedes-Benz cars, has pledged to keep up its spending on research and development despite the industry being battered by eroding sales. According to previous company statements, Daimler plans to spend around EUR14 billion on research and development between 2008 and 2010.

BMW has been cutting about 8,100 jobs globally, with temporary staff accounting for 5,000 positions, as part of a wide-ranging cost-cutting target of EUR6 billion by 2012. BMW Chief Executive Norbert Reithofer indicated earlier Tuesday that this target might be exceeded.

Cutbacks on personnel costs are expected to lead to EUR500 million in cost savings this year. Reducing expenses in materials, production and development are expected to account for two-thirds of the planned overall cost reduction.

Draeger reiterated that BMW is still in talks over additional cooperation projects with Daimler for example on joint purchasing of certain components, but declined to elaborate on a timeframe for taking decisions forward.

Both car companies focus on making luxury sedans and sport-utility vehicles that often compete head to head, a factor that has inhibited collaboration in the past. However, BMW and Daimler already have a cooperation project together with General Motors Corp. (GM) to develop hybrid technologies.

Auto makers around the world have been hit hard in recent months by shrinking demand for new cars and tight credit markets amid the financial crisis, increasing the pressure to enter alliances to share costs and create synergies.

Company Web site: www.bmw.com

-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512; christoph.rauwald@dowjones.com