Last week, two of the biggest players in the car industry confirmed a growing partnership. We consider the broader implications

Car companies will try multiple ways to save money in the least damaging way possible in the coming decade, and we got a taste of that last week when Volkswagen and Ford announced details of their future alliance.

The first concrete steps will be model swaps in the profitable world of vans but the two companies are also investigating ways to collaborate on electric vehicles, autonomous vehicles and the whole complex world of mobility services. They’ve also said they’re open to working together on car models.

“You can’t do this alone,” Ford CEO Jim Hackett said of the race to develop these new and costly technologies.

First, though, they’ve got to free up the cash to do that, and that’s where the commercial vehicle sharing comes in. Ford will build a pick-up to replace the VW Amarok and its existing Ranger, starting in 2022.

A year later, Ford will also build the next Transporter in its Turkish plant alongside an equivalent Transit Custom, while VW will build them both a Caddy/Transit Connect compact van in Poland.

The two companies reckon that, between them, they’ll save $1 billion (£773m) a year by spreading the cost of development and shifting work to low-cost countries.

The financial community thinks this a smart move: “It can only be seen as a step in the right direction,” said Arndt Ellinghorst, analyst at investment banking advisory firm Evercore.

This tie-up shouldn’t damage the brands. Vans and pick-ups have a long history of inter-brand collaboration and few van owners really care, although VW has to sell the idea of a Ford-built, Ford-powered Transporter to its loyal fan base of surfer types. (The Transporter is the direct descendent of the T1 hippy bus, remember, and the model has been built in VW’s Hanover plant in Germany since 1956.)

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Aligning the pair’s van plans wasn’t easy, VW boss Herbert Diess explained at a joint conference last week. “It’s a tough job, but it’s worthwhile because it’s meaningful for both companies,” he said.

What comes after that might be more significant. Ford could share VW’s MEB electric car platform, which will be used to underpin 27 electric vehicles throughout the VW Group by the end of 2022. But VW would love to spread the considerable cost of MEB even further.

“We are in constructive open dialogue,” Diess said. “We are open to share and generate more scale to reduce risk in the electrification strategy.” Meanwhile, VW is likely to pool its knowledge of autonomous cars with Ford’s Argo A1 autonomous driving unit, again helping to share the burden of a technology that’s already sucking in billions with no clear path to profitability. Ditto mobility.

After that, it’s a case of the two deciding whether or not to more closely enmesh on cars – the part where brand separation really does matter.

They have worked together on cars before (see below), but compared with the vans, it’d be much harder to navigate multiple minefields that would arise, not least the inevitable shutting of plants. But it’s not impossible. VW, for example, is known to be unhappy with the scale economies of its Up-based city cars, while Ford doesn’t sell a car in that sector (The Ka+ sits in a class above).

Diess said: “Passenger cars are currently not under discussion but I wouldn’t exclude anything which is meaningful for both companies.”

It’s not the first time…

Volkswagen and Ford have collaborated before. The most significant for Europe was the AutoEuropa partnership that began in 1995 to produce the VW Sharan, Seat Alhambra and Ford Galaxy large MPVs in Portugal. It didn’t last long. By 1999, Ford had decided to go its own way with the next Galaxy and S-Max.

Less well known is a longer partnership, dubbed AutoLatina, in Brazil and Argentina starting in 1987 to badge-engineer each other’s cars. It ended in 1995 but there are still Ford-badged Santanas and VW versions of Escorts running around South America. Ford’s copy of the Santana was even called Galaxy in a foretaste of the European partnership.

Nick Gibbs

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Comments
11

24 January 2019

Car groups and alliances are certainly the common thing nowadays but there's one volume firm, in Europe at least, that still stands alone and that's BMW. New (but low volume) Z4 apart, BMW Group hasn't, and doesn't even look like being involved, in an alliance or expanding its own car business portfolio beyond BMW, Mini and Rolls Royce, specially with BMW-badged cars which are the volume sellers within the group. Every other volume company in Europe is part of a larger group or and alliance, even premium brands. Mercedes develop some of their cars with Renault and Nissan while Audi, as we all know, is part of the VW Group. While Volvo is part of Geely and Jaguar and Land Rover are part of Tata. BMW seems content to go it alone and financially it doesn't seem to be an issue for them either. And I suspect maintaining as much BMW-ness as possible throughout their cars is essential for them. 

24 January 2019
Lanehogger wrote:

Car groups and alliances are certainly the common thing nowadays but there's one volume firm, in Europe at least, that still stands alone and that's BMW. New (but low volume) Z4 apart, BMW Group hasn't, and doesn't even look like being involved, in an alliance or expanding its own car business portfolio beyond BMW, Mini and Rolls Royce, specially with BMW-badged cars which are the volume sellers within the group. Every other volume company in Europe is part of a larger group or and alliance, even premium brands. Mercedes develop some of their cars with Renault and Nissan while Audi, as we all know, is part of the VW Group. While Volvo is part of Geely and Jaguar and Land Rover are part of Tata. BMW seems content to go it alone and financially it doesn't seem to be an issue for them either. And I suspect maintaining as much BMW-ness as possible throughout their cars is essential for them. 

There are rumours that BMW and Merc (Daimler) are eyeing each other up for partnership...

24 January 2019
Lanehogger wrote:

Car groups and alliances are certainly the common thing nowadays but there's one volume firm, in Europe at least, that still stands alone and that's BMW. New (but low volume) Z4 apart, BMW Group hasn't, and doesn't even look like being involved, in an alliance or expanding its own car business portfolio beyond BMW, Mini and Rolls Royce, specially with BMW-badged cars which are the volume sellers within the group. Every other volume company in Europe is part of a larger group or and alliance, even premium brands. Mercedes develop some of their cars with Renault and Nissan while Audi, as we all know, is part of the VW Group. While Volvo is part of Geely and Jaguar and Land Rover are part of Tata. BMW seems content to go it alone and financially it doesn't seem to be an issue for them either. And I suspect maintaining as much BMW-ness as possible throughout their cars is essential for them. 

 

Not strictly true. Apart from the Z4 Toyota tie-up, BMW used to use PSA diesel engines in the MINI.

This VW/Ford tie-up will detroy the reputation and 'image' VW currently have for life-style users of the Transporter (completely unfounded in my experience). Used Transporters with a bit of bling list for much more than a Transit could ever dream of. This won't last.

24 January 2019
Jeremy wrote:

Lanehogger wrote:

Car groups and alliances are certainly the common thing nowadays but there's one volume firm, in Europe at least, that still stands alone and that's BMW. New (but low volume) Z4 apart, BMW Group hasn't, and doesn't even look like being involved, in an alliance or expanding its own car business portfolio beyond BMW, Mini and Rolls Royce, specially with BMW-badged cars which are the volume sellers within the group. Every other volume company in Europe is part of a larger group or and alliance, even premium brands. Mercedes develop some of their cars with Renault and Nissan while Audi, as we all know, is part of the VW Group. While Volvo is part of Geely and Jaguar and Land Rover are part of Tata. BMW seems content to go it alone and financially it doesn't seem to be an issue for them either. And I suspect maintaining as much BMW-ness as possible throughout their cars is essential for them. 

 

Not strictly true. Apart from the Z4 Toyota tie-up, BMW used to use PSA diesel engines in the MINI.

This VW/Ford tie-up will detroy the reputation and 'image' VW currently have for life-style users of the Transporter (completely unfounded in my experience). Used Transporters with a bit of bling list for much more than a Transit could ever dream of. This won't last.

They had another tie-up with Toyota. BMW got Toyota's Hybrid tech and in return received BMW's diesel tech.  Went well, for BMW

typos1 - Just can’t respect opinion

24 January 2019

FORD have nothing to offer, the FOCUS EV has ceased production in Europe and sells next to nothing in the US due to it being so poor and outdated. So if anything they're retreating from the EV market.

Why would VW give them a next to complete BEV only for FORD to stick their headlights and badge on it and under cut VW.  At best FORD might be VW's puppet in the states selling rebadged VW's on a comission.

FORD - You snooze you lose

typos1 - Just can’t respect opinion

24 January 2019

For the US market, might they rebadge Skodas / SEATs to give a token presence in the passenger car market that they are leaving, hedge their bets for when the economy crashes and SUVs are no longer flavour of the month?

24 January 2019

I'd forgotten about the previous Sharaxy partnership. In retrospect, probably a mistake for Ford to then go it alone, as sales of SUVs have crashed.

24 January 2019

There will be a need to develop EVs for city delivery services and trades around the world. Ford and VW can make massive savings developing a shared scalable platform together releasing funds to differentiate the brands.

The Car based van EV platform share is another immediate opportunity.

Next generation Utes and large SUV looks promising for a Ford lead.

longer term Ford will need to develop small and medium size passenger vehicle platforms for ICE/hybrid/ICEEV/EV to market across EMEA, APAC and BRIC. VW can lead this area.

Top line is a win win for both companies 

24 January 2019

Surely platform sharing for the next gen Mondeo/Passat must be on the cards? Unless Ford are ditching Mondeo man in Europe too? 

24 January 2019

Dear Mr Autocar, you've got it wrong again. Ford didn't disolve its relationship with VW in MiniVans in 1999. The Galaxy/ S-max was introduced in 2006. Get it right!!! If your editorial can't get the facts right, then ask me, I'll gladly work for you checking the facts.

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