Many may not remember this, but back in January 2019, Volkswagen and Ford made an alliance to work together on commercial vehicles. Just a few months later, in July 2019, they agreed to work together also on battery and self-driving technology development. Just Thursday, the relationship between the manufacturers tightened even more as a new announcement surfaced from VW.
Scratching each other’s backs
Prior to all these agreements, Volkswagen was reeling from the Dieselgate fiasco, and Ford was not as strong as it wanted to be, or had been in a long time. So, the manufacturers, who were friendly to each other at the time, were willing to explore options of how they could scratch each other’s backs.
Also, at the time, Sergio Marchionne’s chant was still fresh in the air and wafting across the entire automotive industry. That chant was, find partners to increase the economies of scale. Sergio was the head of FCA, Fiat Chrysler Automobiles, until the time of his death. But, his chant is still drifting through the halls of industry. For example, Nissan and Renault have on-again, off-again discussions for a merger, and FCA and Peugeot are looking to move forward together soon.
Economies of scale
It is hoped by VW and Ford that their own alliance will help them share product development costs, and thereby reduce overall expenses. But, what is not being discussed publicly is, are these additional incremental steps taken in sharing costs, technologies, and platforms the precursor to bigger things? Will this additional sharing and mutual admiration lead to an eventual merger?
Let us be clear. Thursday’s announcement from VW was not a declaration of a soon coming merger. It was, however, an announcement that the two are working together on even more plans. Here is what the announcement covers, as reported by Reuters,
“Among the shared projects specified by VW are a midsize pickup to be developed by Ford; a city delivery van to be developed by VW; a larger commercial van to be developed by Ford, and a new electric vehicle for Ford of Europe, to be built on VW’s electric vehicle architecture.
Also on the Reuters post,
Regarding official approval of the agreements, a Ford spokesman on Thursday said, “We look forward to jointly providing an update soon.”
Growing family resemblance
It has been said that the longer you are with somebody, the more you begin to look like each other. Ford and VW continue to share more and more together. So, a growing family resemblance is inevitable. Does that mean a merger is inevitable? Not necessarily? But, wouldn’t that turn the whole automotive world upside down if they did?
The thought of two historic powerhouse brands coming together from the United States and Germany is huge. Remember that VW is already part of an extensive family of automotive companies. So, just think, a possible merger could mean the new family would include everything from Porsches to F-150s, Bentley’s to Mustangs, Huracans to Explorers, R8s to Escapes, and Jettas to Navigators.
Ever tightening bonds of business is a good thing. It helps reduce costs and advance technology amongst projects. Soon enough, these enhanced bonds of business often form a merger of some sort. Although the discussion is not public right now, VW and Ford seem to be taking steps inch by inch closer to that discussion. Should such a discussion happen, it likely will not be soon. But, until both parties walk away from each other, it is certainly something on the back of the minds of automotive writers such as myself. Stay tuned.