The saga between BMW and Daimler forming a strategic alliance dates back more than two years. To this day, nothing major has materialized except a deal over procurement and purchasing of common components, but there was hope that a resolution would be found following the surface of reports that the two German automotive groups were about to embark on a share swapping deal.

Germany’s Der Spiegel first reported today that Daimler and BMW would acquire a 7% stake in each other, but now the same newspaper is reporting that the Quandt family, BMW’s biggest shareholder with a 46% controlling stake, has quashed the deal over fears Daimler may attempt a takeover.

Instead, the companies will reportedly work together on a smaller scale and continue with the current procurement and purchasing cooperation. The two have also looked at developing engines and whole vehicle platforms together but have so far been successful at coming to an agreement.

In 2007, the idea of cooperation between BMW and Daimler was somewhat controversial, even to the companies' own spokespersons. At one point, Daimler even alleged that it had no interest in working with BMW. But times, and economic circumstances have changed. Leveraging the massed buying power of the two companies can help cut costs without affecting product quality in any way.

To muddy the waters even further, BMW is also in talks with Fiat but nothing has been confirmed yet.