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Ford and VW “Exploring a Strategic Alliance”

June 21, 2018 0 Comments

On Tuesday, Ford and Volkswagen announced that they will be “exploring a strategic alliance” to work jointly on potential projects in an effort to improve both companies’ global competitiveness.

“Markets and customer demand are changing at an incredible speed,” Dr. Thomas Sedran, Head of Volkswagen Group Strategy, said in a statement. “Both companies have strong and complementary positions in different commercial vehicle segments already. To adapt to the challenging environment, it is of utmost importance to gain flexibility through alliances.”

Neither automaker will take stake in the other as part of the alliance.

The proposed alliance is seemingly geared towards “sharing costs for developing new vehicles” like delivery vans, UBS analysts wrote in a research note Wednesday. Such a partnership could help both automakers adapt to the sweeping trend towards electrification in the commercial sector.

“Ford is a leading player in the European [light commercial vehicle] market with its Transit family and, therefore, significant economies of scale might be achievable from VW’s perspective,” analysts wrote.

VW is still dealing with the fallout of its emissions scandal; in September 2015, the automaker admitted to using illegal defeat devices on millions of vehicles to cheat U.S. emissions tests.

Last week, Audi CEO Rupert Stadler was arrested as part of an investigation by German authorities into the diesel scandal, making Stadler the latest executive linked to the scandal.

Ford announced earlier this year that it was going to stop selling most of its car models across North America as it shifted focus towards SUVs, trucks, and commercial vehicles.

“Ford is committed to improving our fitness as a business and leveraging adaptive business models – which include working with partners to improve our effectiveness and efficiency,” said Jim Farley, president of Global Markets at Ford. “This potential alliance with the Volkswagen Group is another example of how we can become more fit as a business, while creating a winning global product portfolio and extending our capabilities.”

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