Ford and Volkswagen are working toward a major announcement on Jan. 15 during a key car industry event, the Detroit auto show, according to people close to talks about an alliance between the two automakers.
Sources in the U.S. say the situation is fluid but hopeful. “Nothing is definite,” a person familiar with the discussions told the Detroit Free Press.
Volkswagen and Ford have been talking since summer about areas of potential cooperation.
The auto companies agreed not to discuss anything publicly this week, sources told the Free Press.
“Our memorandum of understanding with VW covers conversations about potential collaborations across a number of areas,” said Ford spokeswoman Jennifer Flake. “It is premature to share additional details at this time. We look forward to sharing an update soon.”
Volkswagen spokesman Mark Clothier declined to comment, saying company policy prohibits speculative discussion.
Multiple sources told the Free Press that breadth and details of the expected alliance are still not final, though ongoing talks have included a cost-cutting partnership involving electric and driverless technology.
Both Ford and VW sources have said in recent months that talks are proceeding as hoped. The companies also have said any partnership won’t be a merger or include equity stakes.
‘Big, bold move’
News of a potential announcement won praise from industry analysts.
“This is a very big, bold move,” said Charles Ballard, an economics professor at Michigan State University. “The scale of the proposed alliance tells us a lot about the wrenching changes that are being wrought in the industry by trade wars and changes in technology and consumer preferences.”
Jon Gabrielsen, a market economist who advises automakers and auto suppliers, said partnerships are critical to all serious players moving forward.
“The global auto industry is rapidly becoming one in which major scale is critical,” he said. “Ford’s scale is not large enough, and VW has insufficient presence in the U.S. In addition they each have significant challenges in China and in trying to be the most competitive in electric vehicles and autonomous vehicles for the future.
John McElroy, host of “Autoline This Week” and the son of a retired Ford executive, said the alliance could be massive in terms of industry transformation, even if the news leaks just a bit at a time.
“If VW is able to use Ford’s development in autonomy and if Ford is able to use Volkswagen’s development in electrification, it’s not just the cost savings that is important – and that would be big – but it’s getting products to the market much, much faster,” he said. “Bang! This is cost savings and time savings.”
He continued, “Additionally, Volkswagen is looking at having Ford build vehicles for VW in the U.S. market. That would be such a win-win for both companies. Volkswagen has nowhere near the market share that it should have as the largest or second largest car company in the world.”
Marick Masters, a business professor at Wayne State University in Detroit, said a partnership with VW “is a very significant step in the right direction for Ford.”
The move would recognize the realities of a changing market in which the cost of competition is high and growing, he said. “This is an opportunity for two companies to combine resources, drive economies of scale and get ahead of the curve on electric cars.”
The move, Masters predicts, could result in more jobs in both companies.
Also on Wednesday, Volkswagen announced the immediate hiring of an Apple executive, Alexander Hitzinger, 47, who worked as senior director of hardware engineering, as the new member of the Brand Board of Management for Technical Development at Volkswagen Commercial Vehicles.
He will be in charge of driverless technology activities for VW, the company said.
Contact Phoebe Wall Howard: email@example.com or313-222-6512. Follow her on Twitter @phoebesaid
Read or Share this story: https://www.usatoday.com/story/money/cars/2019/01/09/ford-volkswagen-detroit-auto-show/2529189002/