With today’s announcement, Ford and Volkswagen form the largest global alliance in the automotive industry. To be perfectly clear neither company enters the alliance with an equity share in the other’s business. There is no cross-ownership between the two companies.
Most importantly Ford CEO Jim Hackett assured Ford employees there are no planned workforce reductions as a result of the collaboration. Both companies will contribute to each others model line-ups. The alliance is intended to provide joint cost savings for both companies. Ford and Volkswagen have agreed to share investments in developing new technologies. Thereby leveraging their combined resources to bring product changes to the market faster.
Volkswagen CEO Dr. Herbert Diess emphasized the industry is experiencing fundamental changes. This collaboration between two like-minded partners that have similar views and expectations is just the beginning. He expects to see further formal agreements in the future. Dr. Diess indicated the $800 million investment in Volkswagen’s Chattanooga, TN assembly plant will make it the base for Volkswagen manufacturing in the United States.
Dr. Diess referred to the separate company’s objectives of remaining competitors in the marketplace. The collaborative goal is to take two strong players in the industry and accelerate innovation that both companies will share and benefit from.
The full text of the press release appears below.
DETROIT, Jan. 15, 2019 – Volkswagen AG and Ford Motor Company today announced the first formal agreements in a broad alliance that positions the companies to boost competitiveness and better serve customers in an era of rapid change in the industry.
Volkswagen CEO Dr. 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. 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 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.
Commercial van and pickup collaboration
Ford and Volkswagen 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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