FRANKFURT, Germany (AP) _ Even though he's holding the favored bid for British luxury carmaker Rolls-Royce, Volkswagen chief Ferdinand Piech isn't ruling out a counteroffer by German rival BMW.

Rolls-Royce parent Vickers, which agreed to BMW's offer of $556 million in March, switched gears Thursday and announced it would recommend Volkswagen's bid of $690 million to stockholders.

BMW wouldn't comment Friday on Vickers' decision to side with VW, but did reiterate it would stop engine deliveries to Rolls as early as possible if Vickers shareholders vote in favor of VW's offer.

BMW currently supplies the power plants for the new generation of Rolls and Bentleys unveiled this year.

Piech was quoted Friday by the daily Braunschweiger Zeitung as saying he could not rule out a further bidding war with BMW. But he dismissed as ``saber-rattling'' BMW's threat to halt engine deliveries.

Piech said that, in any case, some kind of exchange could be negotiated with BMW so that the Munich-based automaker continues its parts deliveries, the newspaper said.

Vickers shareholders are to decide between the opposing bids at a meeting June 4.

The bidding war over Rolls-Royce comes as German automakers make huge strides toward globalization.

Mercedes parent company Daimler-Benz and the No. 3 carmaker in the United States, Chrysler, announced a merger Thursday that will radically transform the world's automotive industry.

Daimler chairman Juergen Schrempp predicted the world's top 18 automakers could shrink to as few as eight or nine due to mergers in coming years.