The BMW insider also addressed rumors about BMW working on a long-wheelbase M5 aimed at the Chinese market. "The long-wheelbase platform is reserved for standard versions of the 5-series sold in the Chinese market. There are no existing plans for an M5 on this structure," the source said.

The new BMW M5 will use a modified version of the 4.4-liter V8 twin turbocharged engine from the X5 M and X6 M, albeit in a more powerful state of tune than the 555 horsepower it develops on the two performance SUVs. BMW did not offer details on the engine output of the M5, as the company doesn't want to ruin the surprise ahead of the production car's reveal at the Frankfurt auto show later this year.

However, the carmaker said the new M5 will have significantly more power than its predecessor while also being at least 25 percent more fuel-efficient. The reduction in fuel consumption will be due to fuel-saving measures implemented by BMW's Efficient Dynamics department such as an automatic stop-start system, brake energy regeneration system and on-demand auxiliary functions for the water pump. Fuel economy will also benefit from a new seven-speed dual-clutch automatic transmission.

By Dan Mihalascu