Volkswagen and Ford Announce Alliance Without Cross Equity

Posted on 15 January 2019 by Ken Zino
AutoInformed.com on Ford Stock 2007-Jan 2019

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Volkswagen AG and Ford Motor Company today announced the first formal agreements in a broad alliance that has far reaching implications in Europe, South America and Africa. Volkswagen AG CEO Dr. Herbert Diess and Ford CEO Jim Hackett during a joint conference call said the companies will first deliver medium pickup trucks for global customers starting in 2022. They intend to follow with commercial vans in Europe. Equity markets were neutral immediately after the announcement.

The history of such industry collaborations is difficult and littered with road kill. The problem is whether the two global giants and hundreds of thousands of workers can walk in step together or stumble over each other.

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Ford Motor CEO Jim Hackett (left) and Volkswagen AG CEO Dr. Herbert Diess.

The van and pickup agreements are targeted to deliver scale and efficiencies for each company starting in 2023. The companies estimate the commercial van and pickup cooperation will yield improved annual pre-tax operating results, starting in 2023. Ford said this is worth $500 million in efficiencies for an ambitious platform consolidation with specific targets.

Dr. Herbert Diess, CEO, Volkswagen AG said, “Volkswagen and Ford will harness our collective resources, innovation capabilities and complementary market positions to serve better millions of customers around the world. At the same time, the alliance will be a cornerstone for our drive to improve competitiveness.” The alliance will be governed by a joint committee led by Hackett and Diess and will include senior executives from both companies.

Since the work coincides with Ford’s European restructuring and triggers product allocations for VW’s German and European product allocations, a strategic review of Russia the work needs to begin now. It is a sweeping effort involving unions, plants, products, suppliers, marketing and go to market strategies for both companies, distributors and dealers. Hence the public announcement today with limited details since the work is already underway.

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.

 

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About Ken Zino

Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
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2 Responses to Volkswagen and Ford Announce Alliance Without Cross Equity

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