Ford protects crown jewels in its careful alliance with Volkswagen
Ford’s alliance with Volkswagen appears to be carefully crafted to protect and potentially promote the U.S. automaker’s strengths and limit risk. There’s no sign of any immediate impact on Ford’s U.S. employment or manufacturing, but no likelihood of a hollowing out of Ford’s core capabilities.
Perhaps most important, Ford Chairman Bill Ford and CEO Jim Hackett protected the crown jewels: VW and Ford are not merging, today or probably ever, and the F-150 pickup remains solely and 100 percent a Ford.
A lot of automotive alliances that looked good for both companies have gone sideways – DaimlerChrysler, anyone? – but focused deals that combine bold ambitions with limited scope can be very successful.
The alliance Ford and VW’s leaders announced Tuesday appears to be the latter. It respects and could increase Ford’s strength in a couple of key areas.
Working with what’s likely the world’s largest automaker – VW Group just said it sold 10.8 million vehicles in 2018; we’ve yet to hear from competitors Toyota and Renault-Nissan-Mitsubishi – could protect Ford’s position as a leader by giving it access to considerably bigger volumes when it develops future commercial vans and midsize pickups.
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Commercial vehicles are an underappreciated part of Ford’s global success, a consistent moneymaker for the company. Tying up with VW as developer of the next generation of Transit UPS-style vans helps assure that Ford retains the manufacturing volume to develop leading vehicles, even if its European passenger-vehicle business continues to shrink.
VW Group has its hands full managing a product line that runs from semi-trucks to Bentleys to motorcycles to Porsches, and developing electric vehicles. Handing off responsibility for midsize commercial vans like the Ford Transit and midsize pickups like the new Ford Ranger should be a relief to product planners at VW headquarters in Wolfsburg, Germany.
The companies aren’t rushing, even into the areas where they’ve agreed to cooperate. The earliest you’ll see a jointly developed vehicle on the road is 2022. That should be long enough to make sure the vans and pickups are true to their brands, not just a VW badge slapped on a Ranger midsize pickup, for instance.
And the Ranger, which Ford expects to be very popular and profitable in the United States, won’t have to compete with a German cousin here any time soon. The midsize pickup cooperation will include development of the architecture for the next generation, but it’s limited to South America, Africa and Europe, areas where VW currently sells its Amarok pickup.
North America, Thailand and Australia-New Zealand, areas vital to Ford’s plans for Ranger, are off the table for VW. That also means workers in Ford’s Wayne assembly plant aren’t likely to be building VW competitors to the Ranger any time soon.
Ford and VW intentionally left a lot unsaid. They’re also working to share costs and expertise on electric and self-driving vehicles, but the timing wasn’t right to go public. That’s probably because development of the first generation of vehicles using those technologies is already well advanced. Anything they agree on now won’t be on the road for at least four or five years.
They’ll reap the fruit of cooperation on midsize pickups and delivery vans well before that, if management can keep turf wars and bureaucracy from derailing their agreement.
This article originally appeared on Detroit Free Press: Ford protects crown jewels in its careful alliance with Volkswagen
