DETROIT: Volkswagen and Ford announced a new alliance on Tuesday to jointly develop commercial vans and pickups starting in 2022, in a bid to reduce costs in the increasingly competitive auto market.
The announcement came after more than six months of talks between the automakers which also included discussions about cooperation on autonomous and electrification technologies for cars of the future.
The American and German giants will join forces to develop commercial vans and medium-sized pickups as early as 2022. But the deal does not involve cross-ownership, according to a joint statement. The companies also will "investigate collaboration on autonomous vehicles, mobility services and electric vehicles and have started to explore those opportunities.
VW CEO Herbert Diess said the alliance "will be a cornerstone for our drive to improve competitiveness." Under the alliance, to be governed by a joint committee headed by the chief executives of the two companies, Ford will engineer and build medium-sized commercial pickups for both firms.
Ford also will build large commercial vans for European customers and VW will develop a city van. The city van would be designed for the European market, while the medium-sized pickup truck would be specific to South America, Africa and Europe, Ford said.
The alliance follows in the footsteps of others formed in the auto industry, which is facing rising costs, amid the drive to develop new technologies, as well as changing consumer preferences.
Honda in October invested $2.5 billion in Cruise, GM's proprietary technology subsidiary, in exchange for a 5.7 per cent stake. Toyota and Mazda plan to open a joint factory in the southern US city of Huntsville, Alabama in 2021. "The industry likely will see more kinds of collaboration like the one announced today by Ford and VW," said industry analyst Michelle Krebs of Autotrader. "A single automaker can't be all things to all customers around the globe as vehicle and technology development become increasingly more expensive.
In a conference call with reporters and investment analysts, the chief executives of VW and Ford said they were determined to continue talks on expanding the collaboration further to include new technologies and additional vehicle programs. "How, where and when this might happen, this is what we are currently negotiating with our colleagues at Ford," Diess said in prepared remarks.
Among the discussions, was a potential collaboration in China on electric drivetrains. It was the second major announcement for Volkswagen, which on Monday unveiled a USD 800 million investment to expand its plant in Chattanooga, Tennessee to build electric vehicles.
Volkswagen will be spending 800 million dollars in Chattanooga, Tennessee. They will be making Electric Cars. Congratulations to Chattanooga and Tennessee on a job well done. A big win!— Donald J. Trump (@realDonaldTrump) January 15, 2019
VW made its announcement at the Detroit auto show Monday, as the US's premiere industry invent got underway. The automaker said it would create 1,000 new manufacturing jobs.
The two automakers were scheduled for a joint appearance at the auto show on Tuesday morning to announce their alliance but abruptly cancelled choosing to release a statement and hold a conference call instead. "We don't have enough details yet to go out in front of more than 500 journalists, so we decided to call it off," Ford spokesman Mark Truby told AFP on Monday evening.
Trump, who campaigned on a promise to increase US manufacturing jobs, has regularly commented on production decisions by automakers. In November, he blasted General Motors' decision to idle several plants and cut 14,000 jobs as part of a major restructuring, calling it "unacceptable" and "nasty."