Ford Motor Co. in Dearborn and Volkswagen AG in Germany today announced the first formal agreements in a broad alliance that they hope positions the companies to boost competitiveness and better serve customers in an era of rapid change in the industry.
Jim Hackett, CEO of Ford, and Herbert Diess, CEO of Volkswagen, confirmed during a conference call this morning that the companies intend to develop commercial vans and medium-sized pickups for global markets beginning as early as 2022. The two automakers had planned to announce the agreements at a press conference at the North American International Auto Show, but opted for the conference call.
They say 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.
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.
In addition, Volkswagen and Ford have signed a memorandum of understanding to investigate collaboration on autonomous vehicles, mobility services, and electric vehicles as well as exploring other 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 says. “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.”
A joint committee will govern the alliance, which does not entail cross-ownership between the two companies. This committee will be led by Hackett and Diess and will include senior executives from both companies.
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.
Ford designs, manufactures, markets, and services a full line of Ford cars, trucks, SUVs, electrified vehicles, and Lincoln luxury vehicles; provides financial services through Ford Motor Credit Co.; and is pursuing leadership positions in electrification, autonomous vehicles, and mobility solutions. Ford employs approximately 200,000 people worldwide.
The Volkswagen Group is headquartered in Wolfsburg, and is one of the world’s leading automobile manufacturers and the largest carmaker in Europe. The product spectrum ranges from motorcycles to small cars and luxury vehicles.
In the commercial vehicle sector, products include pick-ups, buses, and heavy trucks. The group operates 120 production plants in 20 European countries and in 11 countries in the Americas, Asia, and Africa. The company has around 642,292 employees worldwide.