Ford, Volkswagen to explore joint development of commercial vehicles

 The Ford Transit van is a global commercial success. Now, Ford and Volkswagen will be teaming up to develop new commercial vehicles.

The Ford Transit van is a global commercial success. Now, Ford and Volkswagen will be teaming up to develop new commercial vehicles.

Ford Motor Co. and Volkswagen AG announced the signing of a Memorandum of Understanding (MOU) to potentially develop commercial vehicles as part of a strategic alliance.

The exact nature of the work and the type of vehicles to be developed was not detailed, but the companies said they are “exploring potential projects across a number of areas – including developing a range of commercial vehicles together to better serve the evolving needs of customers.” No equity or cross-ownership stakes would be part of the deal.

“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, Ford’s president of Global Markets. “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.

“We look forward to exploring with the Volkswagen team in the days ahead how we might work together to better serve the evolving needs of commercial vehicle customers – and much more,” Farley added.

Ford already has a significant global presence, especially in Europe and North America, with its Transit and Transit Connect vans, which are increasingly becoming popular as last-mile delivery vehicles.

Volkswagen also has a significant global presence in commercial vehicles with heavy-duty vans and trucks offered in Europe and a growing stake in North American truck maker Navistar. The company also owns Volkswagen Commercial Vehicles, MAN and Scania.

“Markets and customer demand are changing at an incredible speed,” said Thomas Sedran, head of Volkswagen Group Strategy. “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. This is a core element of our Volkswagen Group Strategy 2025. The potential industrial cooperation with Ford is seen as an opportunity to improve competitiveness of both companies globally.”

Reports suggest the arrangement may be more geared toward creating economies of scale, but it also dovetails with Ford’s recent announcement that it would stop producing new car models and focus on trucks, SUVs and commercial vehicles going forward.

The company currently offers a Ford F-750 model with a tractor configuration that several beverage haulers are now using.

Volkswagen has been increasing its ownership stake in Navistar over the past two years and currently holds nearly 17% of that company’s stock. Increased ownership is possible in the future, giving Volkswagen a foothold in the North American commercial vehicle market. Navistar and Volkswagen are increasingly collaborating on projects, including a global engine platform.

Last fall, at a Navistar press conference at the North American Commercial Vehicle Show inside the Georgia World Congress Center in Atlanta, Andreas Renschler, member of the Executive Board of Volkswagen AG responsible for commercial vehicles, did not rule out Volkswagen taking a larger stake of Navistar in the future. “On our way to being a global champion, all options are open,” he said in response to a question on the subject.

Renschler also hinted at a possible commercial van at some point for International. “We are looking to see if there are certain products or opportunities on the commercial side,” he said about Volkswagen’s van plans.

On the topic of collaboration Troy Clark, Navistar president & CEO, said the two companies will work on a next-generation of fully integrated big bore powertrains, with a likely launch in 2021. The powertrain is expected to take advantage of a new Joint Procurement program that is designed to secure components and parts from suppliers for all the global truck brands under the companies’ portfolios.

The alliance will also produce a new connected vehicle program, joining Navistar’s OnCommand system with Volkswagen’s Rio system.

A partnership with Ford and closer collaboration – or outright ownership of Navistar eventually - could potentially provide Volkswagen with a complete commercial vehicle lineup, from Class 1 through Class 8, in North America. For Ford, the collaboration could help its transition to its truck, SUV and commercial vehicle future quicker and at less cost.