BMW and DaimlerChrysler, which owns Mercedes, have announced that they are to jointly develop hybrid-drive systems for their cars.

The systems they will develop are aimed at premium rear-wheel-drive cars, and the companies say that they intend to have hybrid cars on sale in three years.

It's most likely that we could see a new hybrid 7 Series first, although the system could have applications in the BMW X5 and Mercedes ML and E-Class cars.