Ford and Volkswagen Enter Alliance to Build Trucks and Vans

January 16, 2019 by Jaclyn Trop, @jaclyntrop

Ford Motor Co. and Volkswagen AG said Tuesday they will join forces to develop and begin selling commercial vehicles worldwide over the next three years.

The partnership will initially focus on midsize pickup trucks and commercial vans, a market in which the automakers project a surge in global demand over the next five years. The companies aim to start delivering trucks globally in 2022, with vans to follow in Europe.

The collaboration allows Ford to pool resources with one of the world’s largest car companies and strengthen its presence in Europe; Volkswagen will benefit from Ford’s strength in trucks. The companies will share development costs and leverage manufacturing capacity while keeping their own brand identities.

The plan calls for Ford to engineer and build pickup trucks for both companies as well as larger commercial vans for Europe, and for Volkswagen to develop and build a city van. Ford said in a statement that the alliance aims to improve pre-tax operating results starting in 2023.

Electric, autonomous vehicles

Ford also said the automakers signed a memorandum of understanding to discuss collaborating on electric and autonomous vehicles and mobility services. That’s where the partnership would be most beneficial, “since that is where the investment cost is pouring in, and returns in this area are very limited and will be for quite some time,” said Jeff Schuster, an analyst for LMC Automotive.

“It appears that VW may have won the first round of these negotiations by getting access to Ford’s truck expertise without giving Ford access to their EV development,” Schuster said. “Ford certainly could benefit from the progress and development that VW has made in vehicle electrification, including EV-specific platform technology, but we question what VW would get out of sharing that other than some additional scale.”

Governed by a joint committee led by senior executives at both companies, the alliance “does not entail cross-ownership between the two companies,” according to Ford’s statement.

“Over time, this alliance will help both companies create value and meet the needs of our customers and society,” Ford Chief Executive Jim Hackett said in a statement. “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.”

Heavy investments

Meanwhile, both automakers are investing heavily in future mobility separately. Volkswagen plans to spend $50 billion through 2023 to build electric vehicles and other technology such as digital services, while Ford said it earmarked $11 billion to restructure its own operations. Volkswagen said Monday that it would invest $800 million and add 1,000 jobs to build electric vehicles at its Chattanooga, Tenn., plant starting in 2022.

Ford brings its expertise in trucks to the alliance. The Ford F-150 has been the best-selling vehicle in the U.S. for more than 40 years. (Photo: Ford)

Ford and VW sold a combined 1.2 million light commercial vehicles last year, “which could represent the industry’s highest-volume collaboration as production scales,” Ford’s statement said.

The Dearborn, Mich.-based automaker is a long-established global juggernaut in the truck segment. The Ford Ranger midsize pickup is Europe’s best-selling truck, and the Ford F-150 has been the top-selling vehicle in the U.S. for more than 40 years. Volkswagen is stronger in sedans but makes truck nameplates for the global market including the Transporter, Caddy and Amarok.

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

Read Next: 2019 Ford Ranger Tops Class at 26 MPG Highway

One Response

  1. Carrosserie

    Glad to know Ford and Volkswagen enter alliance to build trucks and vans. This will surely change the automobile industry in coming years.

    Reply

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