MUNICH, Germany — Look out, Mazda. The MX-5 Miata could be in for some stiff German competition.

That's the word filtering out of BMW's newly renovated Munich-based headquarters, where company sources say plans are taking shape for an entry-level roadster positioned below the Z4.

Such a new model would provide BMW with an open-top rival to the hugely successful MX-5 Miata. The new two-seater is said to be the centerpiece of a plan devised by the German carmaker's outgoing chairman, Helmut Panke, to extend the Z-car lineup.

Just as there are two X cars, the X3 and the X5, BMW thinks there is sufficient demand for a Z2-level roadster. A corollary rumor is that a Z6 roadster is also in the works; it would be a rival to Mercedes-Benz SL.

BMW isn't giving much information away, but officials do say it would take at least four years to engineer and develop a new roadster. That would hint at a possible 2010 launch for the Z2, one year after BMW plans to introduce a successor to today's Z4.

As with the Z4, the new car is likely to share components with the existing 1 Series and 3 Series models in a bid to reduce costs and speed up development. That would make it likely that the Z2 would be built alongside the Z4 at BMW's U.S. plant in Spartanburg, South Carolina.

This story really begins in 2002 when the Z4 arrived, priced well above the Z3. That created a space at the bottom of BMW's lineup for a cheap and cheerful roadster in the mold of the Miata. Although initial studies were created back then, BMW's engineering resources were stretched to breaking point getting cars like the 1 Series, X3 and 3 Series to market, so a decision on its future was put on hold, well-placed BMW sources say.

To keep costs down, the Z2 has been conceived with 4-cylinder power only. It's still early, but expect normally aspirated 1.8- and 2.0-liter engine choices. Also under consideration is a turbocharged 2.0-liter performance model with up to 300 horsepower, according to Inside Line sources.

This new engine is already under development and planned to head into the 1 Series as part of a program that will see BMW introduce a range of new turbocharged engines to its lineup in coming years. Transmission choices should include a standard 6-speed manual and an optional double-clutch unit with steering-wheel-mounted shift paddles.

What this means to you: Just what the doctor ordered: a two-seat open-top BMW, at a price that won't send your bank account into a tailspin.

BMW will not build the Z2.

According to Imotormag, a BMW source says that the car is not on the product plan for the next 10 years. The Z2 was to have been a 4-cylinder, compact roadster that came in below the Z4 in the BMW lineup. The source says that there hasn't even been any "inside gossip" about a possible Z2-type vehicle.

Speculation had it that as the Z4 became a more expensive and upmarket car, with a powerful in-line 6 cylinder engine and a significantly higher price than its previous generation, that the market was ripe for a smaller BMW roadster based on the 1-series. But the BMW source disagrees.

Imotormag's source explains it this way: "We have the 1-Series convertible. It's a drop top, has rear wheel drive, is sporty and comes in at less than £20,000. Why would we need to invest a lot of cash in building a niche car like the Z2? It doesn't make sense in these uncertain times."