Ford and Volkswagen enter into Alliance to develop Commercial Vehicles


Published Date : Jun 20, 2018

In an increasingly dynamic consumer demands in the automobile industry across the globe, it seems that several automakers have been mulling over strategic alliances for competitive gains. World over, these demands are underpinned by the increased regulatory thrust to develop better automotive and low-emission technologies, especially for commercial vehicles. The Volkswagen Group, a globally prominent German automaker, and Ford Motor Company announced on June 19, 2018 that they are seeking a strategic alliance on several automotive projects, a major part of which will focus on co-developing commercial vehicles. The duo sealed the alliance by signing a memorandum of understanding (MoU) which will endow the automakers potential competitive benefits to help better serve global customers.

Tie-up by Automakers to Co-develop Vehicles by Leveraging on Complementary Strengths

Though it is still early to get into the specifics of the alliance, the two multinational automakers will most likely collaborate on building and selling commercial vans increasingly being demanded in urban centers of developed countries. As announced by the companies, the deal won’t end up in any equity arrangements or merger of any sort.

According to Ford, the company’s strategy for growth is supported by adaptive business models and securing a global product portfolio. The current MoU with one of the leading U.S. automakers borders on these initiatives relying on leveraging the complementary strengths in separate commercial vehicle segment, which will end in bolstering their mutual capabilities. On the other hand, the current alliance for Volkswagen reinforces its Group Strategy 2025 which emphasizes on alliances to meet the evolving consumer demands.

Electric Vehicles Emerging as Potential Area of Collaboration

The automakers will be most likely team on co-developing delivery vans, commercial fleets, and trucks. Furthermore, the duo may tap into the potential of hybrid vehicles and electric cars to meet the stringent regulatory demands in various countries, particularly in Europe. However, the fuller implication of the tie-up will be clear over time.