Ford kills rumors over potential merger or equity swap with Volkswagen

Article by Christian A., on October 23, 2018

In June this year, rival carmakers Ford and Volkswagen inked a memorandum of agreement for a possible strategic alliance. Months after signing the MoU, automotive industry analysts are now floating the ideas of possible merger or an equity swap between the American and German companies. Nonetheless, Ford is quick enough to quash such ideas even before they get out of hand.

Under the signed MoU, Ford and VW are exploring a number of potential projects in several areas like the development of a range of commercial vehicles together. Likewise, a possible partnership would also work to better serve the evolving needs of customers. The parties have already made it clear back then that the potential alliance wouldn’t involve any equity arrangement.

However, The Detroit Bureau published an analysis that the potential alliance between Ford and VW might go beyond the commercial vehicle market, since doing so could be beneficial for both carmakers. For instance, Ford can benefit from VW’s robust presence not just in Europe, but also in Latin America and China. On the other hand, VW can take advantage of Ford’s strong fortified status in the United States, particular in the pickup and SUV segments.

The Detroit Bureau went on as suggesting that Ford and VW could share their platforms, especially those successful ones. Likewise, the two carmakers can help other expand their vehicle lineups. For instance, while Ford used to be a pioneer in terms of EV technologies, but a number of carmakers – including VW – has overtaken it. In this regard, VW can help Ford regain its lost ground. Meanwhile, Ford can also help VW salvage whatever image is left after the Dieselgate scandal and rebuild it.

At Ford, it seems to be a suitable time to strike any potential agreement. Jim Hackett, who was named as Ford’s chief executive in 2017, is currently working on a “radical” transformation of the company. For instance, Hackett’s plans include getting rid of its traditional sedans and coupes in the United States while expanding into its more profitable offerings like pickups, crossovers and SUVs. In addition, the plan also entails a push into electrified and autonomous vehicles.

The Detroit Bureau reported that “observers” have disclosed that Ford and VW are currently holding talks, although it remains unclear if such discussions could lead to a larger project than the one regarding the commercial vehicle market.

Nonetheless, a merger or an equity swap between Ford and VW won't happen. A Ford spokesperson sent an e-mailed statement to saying that the any strategic alliance between the carmakers would not involve any equity arrangement, including cross ownership stakes.

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Topics: vw, ford, partnership



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