Ford, Volkswagen team up for money-saving global alliance

Vehicles will be sold overseas

DETROIT - An alliance between Ford and Volkswagen will save the automakers money, the companies announced Tuesday.

Volkswagen CEO Herbert Diess and Ford CEO Jim Hackett confirmed that the companies intend to develop commercial vans and medium-sized pickups for global markets beginning as early as 2022. Their plan is to first deliver medium-sized pickup trucks for global customers, aiming to start in 
2022, and then intend to follow with commercial vans in Europe.

"We'll become No. 1 in large commercial vehicles worldwide, which is a significant gain in market position," Diess said.

Hackett likes the cost-cutting that will come with the alliance.

"Through alliances, these are different than partnerships. We can get shared investment in areas that, in the future, both of us need, and we can cut the cost substantially," he said.

The alliance will help the automakers save money when it comes to electric and autonomous vehicles.

"Ford seems to be ahead in self-driving. VW is pushing to become a world leader with electrification. So I think from the first look, if you can make the relationship or cultures come together and work, probably it's a good deal," said Paul Eisenstein, Detroit Bureau auto analyst. 

Alliance summary:

  • Alliance leverages the two global automakers’ strengths to better compete, innovate and serve customers 
  • Alliance does not involve cross-ownership between the two companies 
  • Companies to first deliver medium pickup trucks for global customers, aiming to start in 2022, and intend to follow with commercial vans in Europe 
  • Van and pickup agreements are targeted to deliver scale and efficiencies for each company starting in 2023 
  • Volkswagen and Ford also are committed to exploring potential collaboration on EVs, autonomous vehicles and mobility services 

The alliance will drive significant scale and efficiencies and enable both companies to share investments in vehicle architectures that deliver distinct capabilities and technologies, the automakers say.

The companies estimate the commercial van and pickup cooperation will yield improved annual pre-tax operating results, starting in 2023.

In addition, Volkswagen and Ford have signed a memorandum of understanding to investigate collaboration on autonomous vehicles, mobility services and electric vehicles and have started to explore opportunities. Both companies also said they were open to considering additional vehicle programs in the future. The teams will continue working through details in the coming months. 
 
“Over time, this alliance will help both companies create value and meet the needs of our customers and society,” Hackett said. “It will not only drive significant efficiencies and help both companies improve their fitness, but also gives us the opportunity to collaborate on shaping the next era of mobility.” 

Diess added: “Volkswagen and Ford will harness our collective resources, innovation capabilities and complementary market positions to even better serve millions of customers around the world. At the same time, the alliance will be a cornerstone for our drive to improve competitiveness.”   

The alliance, which does not entail cross-ownership between the two companies, will be governed by a joint committee. This committee will be led by Hackett and Diess and will include senior executives from both companies, the automakers said. 

Commercial van and pickup collaboration 

Ford and Volkswagen say they both have strong commercial van and pickup businesses around the globe, with popular nameplates such as the Ford Transit family and Ranger as well as the Volkswagen Transporter, Caddy and Amarok.  

The companies’ collective light commercial vehicle volumes from 2018 totaled approximately 1.2 million units globally, which could represent the industry’s highest-volume collaboration as production scales.

Demand for both medium pickups and commercial vans is expected to grow globally in the next five years. The alliance will enable the companies to share development costs, leverage their respective manufacturing capacity, boost the capability and competitiveness of their vehicles and deliver cost efficiencies, while maintaining distinct brand characteristics.  

Through the alliance, Ford will engineer and build medium-sized pickups for both companies which are expected to go to market as early as 2022. For both parties, Ford intends to engineer and build larger commercial vans for European customers, and Volkswagen intends to develop and build a city van.  

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