Ford And Volkswagen To Make Big Announcement At Detroit

Industry News

It all started as a rumor.

For a while now we’ve known something was going on behind the scenes between two of the largest and most influential automakers. One of them was more vocal about it while the other preferred to remain silent. Next week at the 2019 Detroit Auto Show, however, it appears everything will be revealed.

According to Reuters, VW and Ford will make a big announcement about their joint plans in the Motor City. Don't expect to hear plans of a merger but rather an alliance that will benefit both parties. VW’s board will be meeting on Friday to vote on the deal, sources told Reuters. What could this likely alliance look like? How will it improve the competitiveness for both automakers going forward?

We’ve heard that VW is interested in having a mid-size pickup truck of its own, but can’t justify the development expenses for a successful business case. So instead it’s eying the Ranger’s platform. Small vans like the Ford Transit could also be involved in the deal to some extent. Basically, the two want to pool their resources and reduce costs, particularly for autonomous and electric vehicles.

Another example is VW’s MEB electric vehicle platform. VW is actually further ahead than Ford in EVs, so it’s possible Ford is interested in making use of this platform as well. The alliance/deal could also benefit both in terms of geographical presence, licensing agreement, and even using each other’s production plants.

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While this may sound like a merger to some, both parties have stressed time and again that no equity will be exchanged; it’s simply a matter of covering each other's weak points, while saving billions of dollars along the way. An alliance such as this is really nothing new. Other examples include the BMW-Toyota sports car project resulting in the new Z4 and Supra, and GM and Honda’s fuel cell systems project. We’ll be at Detroit next week for the official announcement and we’ll have complete details at that time.

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