In the wake of June’s announcement that the U.S.’s Ford Motor Company and Germany’s Volkswagen AG had together signed a Memorandum of Understanding related to exploring the sharing of commercial vehicle development and production costs, some industry observers are anticipating a more wide-sweeping collaboration.
“Something big is brewing,” says John McElroy of Autoline. “Look, if it isn’t, [Ford CEO] Jim Hackett can’t survive. He has got to drop a bombshell on the industry.”
At the moment, Ford Motor Company is reportedly preparing to introduce a massive round of global layoffs as it tries to rein in costs, especially with regard to its underperforming European and South American businesses. Incidentally, those markets – along with Asia – are areas where Volkswagen is rather strong while Ford falters, but the German automaker has no passenger truck offerings in the U.S., and its North American utility vehicle sales are paltry next to the Big Three’s.
Seeing as those segments are projected to continue growing substantially over the coming years, it makes sense why Volkswagen might want to make a partner of Ford Motor Company. Likewise, VW’s success in the aforementioned global markets could make the company an attractive partner for Ford, as sharing costs could help some of those business units return to profitability.
Another key area of struggle for the U.S. carmaker is China, where sales have slid 27 percent for the year through August. The market represents a golden opportunity for a lot of global automakers, thanks to its booming middle class, but so far, Ford’s attempts to play there haven’t lived up to expectations.
In response to queries, Ford Executive Director of Communications Jennifer Flake told the Detroit Free Press this week: “Ford is committed to leveraging adaptive business models, which includes working with partners to improve our fitness and the value we create for all stakeholders. This strategic alliance with VW is another example.”
She continued: “We continue exploring a strategic alliance and will provide additional details as talks progress toward the end of the year. We believe the work streams — including commercial vehicles — have significant potential, but are not talking about values yet.”
(Source: Detroit Free Press)
Comments
Makes sense! Could Lincoln get a version of the new Touareg?….Hmm. Could VAG help with materials quality? Even help design / build a new Lincoln Continental and Mark X (RWD / AWD)???
Great. Now Ford can become a satellite of VW. Stop selling cars. Stop research on any vehicle. Let the Germans do it because Ford can’t make a profit on anything but trucks, and then eventually not make or sell anything. Their profits then will soar.
I can’t see how working with a giant global competitor helps Ford. This isn’t Mazda. VW isn’t going to surrender sales in Europe, their home territory. And Ford can’t afford to lose SUV sales here. Ford is clearly losing globally and they think by working with a competitor they can save development money. This reeks of desperation.
Ford is losing ground in the market, and competition is high.
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Ford has been well established in Germany for decades. Ford needs more global power – VW brings it.
VW needs more US power and Ford brings it. It’s a win win – why not.
I agree! Seems it has the potential for a productive partnership. I might be a bit biased mind you – as the owner of a VW Touareg Wolfsburg Edition and a Mustang GT Premium, both of which I’m very pleased with.