Published: Wed, January 16, 2019
Markets | By Otis Pena

Ford and Volkswagen form a global alliance - First auto launch in 2022

Ford and Volkswagen form a global alliance - First auto launch in 2022

Last week, Ford said it would cut thousands of jobs, discontinue building money-losing vehicles and look at closing plants as part of a turnaround effort for its unprofitable European business.

The statement said the alliance - which would not entail cross-ownership between the two firms - would position the companies to "boost competitiveness and better serve customers in an era of rapid change in the industry" and "drive significant scale and efficiencies and enable both companies to share investments in vehicle architectures that deliver distinct capabilities and technologies".

The companies also will "investigate collaboration on autonomous vehicles, mobility services and electric vehicles and have started to explore those opportunities". Last year, VW had just 2 per cent market share in the USA and is outsold by Subaru there. This pickup truck is set to come out in 2022 and will be available for customers to purchase around the world.

The jointly developed vehicles will primarily be for Europe, South America and South Africa, at least for now.

While the two companies will share some production plans, Hackett said he does not anticipate any work force reduction in any Ford plants as a result of this alliance.

It will be led by Ford CEO Jim Hackett and Volkswagen CEO Dr. Herbert Diess.

Both Ford and VW do a tidy trade in vans and with costs and threatening city clean air standards possibly making diesel less suitable in future, a battery powered MEB van project makes a lot of sense for any future Transit or T7.

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The commercial-vehicle alliance may do more for VW than Ford, as it fills two weaknesses in the German automaker's commercial lineup - pickups and delivery vans - that are already areas of strength for Ford, Jefferies analyst Philippe Houchois wrote to investors. VW will spend $800 million to expand its only USA vehicle assembly site in Tennessee to produce electric cars for North American buyers as of 2022. Hackett said the companies would ensure that the vehicles have different driving dynamics and driver interfaces in line with their own brand images.

Mr Deiss told reporters: "How, where and when this might happen, this is what we are now negotiating with our colleagues at Ford".

On Monday, VW CEO Hebert Diess told reporters that the announcement was coming Tuesday, at the Detroit Auto Show.

The auto giants may have more to discuss. VW, the world's largest automaker has long struggled to grow its main namesake brand beyond niche status in North America, despite successfully conquering key markets like China. The automaker said it would create 1,000 new manufacturing jobs.

"It fits into our overall strategy to join forces with strong partners for specific topics", Diess said on a conference call Tuesday. More details of this Ford Volkswagen partnership will be made known in the weeks ahead.

Trump, who campaigned on a promise to increase U.S. manufacturing jobs, has regularly commented on production decisions by automakers.

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