FRANKFURT, Germany (AP) _ Now holding the favored bid for British luxury carmaker Rolls-Royce, Volkswagen chief Ferdinand Piech said in comments published Friday that he's not ruling out a counter-bid 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.

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 previous threat to halt engine deliveries to Rolls-Royce in the event of a Rolls-Royce sale to another suitor. BMW supplies about 30 percent of the Rolls-Royce cars' content.

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.