It has set up a new unit called ‘Project i’ which is working on a new car specifically for driving in cities.
BMW chairman Norbert Reithofer said the project is fully independent and “free to act beyond BMW structures if necessary”.
The i stands for innovation and he added: “The task of the Project i team is to present specific solutions in the first half of the next decade. Whether this will require a fourth brand or not, will be decided at a later date.”
Reithofer added that it was not yet clear which alternative drive system or technology the new car would use.
BMW is considering several options, including an electric motor and battery power.
A design will need to be drawn up before BMW makes a final decision on the new brand, while a decision on the drive system will be taken this year.
“We will look at all these things before we decide whether this might be a sub brand for BMW or Mini or a standalone brand.”