Volkswagen and Ford could become the next big automotive alliance.

Comments made by VW CEO Herbert Diess in Washington this week confirm both parties are close to signing off on a deal that could see Ford expand in Europe using the German maker’s platforms and Volkswagen expand North American operations by capitalising on Ford’s free production capacity.

It follows recent reports that Ford is preparing to perform shrewd workforce restructuring around the globe, potentially slashing 25,000 jobs – 11,000 more than GM’s recently announced job cuts.

However, VW will potentially save some jobs in North America while supporting Ford’s cutbacks in Europe, with a new alliance on the cards that will see both manufacturers help each other in their home markets.

Ford declined to comment on the news but Diess, who was at a White House meeting with counterparts Dieter Zetsche - head of Daimler - and BMW CFO Nicolas Peter to discuss European import tariffs, said to media that the desire of both brands to expand more profitably into each other’s markets could be mutually beneficial.

“We are building an alliance with Ford which will strengthen Ford’s position in Europe because we will share platforms,” said Diess to reporters.

“We might use Ford capacity here in the U.S. to build cars for us.”

Ford and Volkswagen said in June this year that they had entered a memorandum of understanding to explore options of working closely together, including sharing electric vehicle architecture (which VW already has in production) and developing autonomous driving technology.

Unlike interest-owned ventures such as the Renault-Nissan-Mitsubishi Alliance, Diess said VW would not take an equity stake in Ford.

The move coincides with the White House meeting which explored options for the maker to sell cars in North America without having to pay a 25 per cent levy on imported products. Currently, VW Group imports Audi and Porsche models from Europe to the US.

“That’s basically why we are here, to avoid the additional tariffs and I think we’re on a good way,” said Diess.

“We need additional capacity here in the United States, we need an additional car plant for VW and Audi combined.

“[We are] considering building a second car plant [in addition to its Tennessee plant]. We are in quite advanced negotiations and dialog with Ford Corporation to really build up a global automotive alliance, which also would strengthen the American automotive industry.”

Entering the festive season, further talks will be on hold until January according to Diess, with an announcement on the new alliance expected to come by mid-2019.

Source: Drive

December 4, 2018