Ford is negotiating with the VW Group to broaden their alliance beyond commercial vehicles, in a bid that would help the U.S. automaker reverse its losses in Europe and South America, while also sharing tech and small car costs with the German brand.
Even though Ford’s stock went up almost 10% after the company surpassed its earnings estimate, the blue oval is still in the midst of a global restructuring and has had to walk back its 2020 margin targets.
Basically, partnering with one of their rivals could help lower costs and get new cars and tech to market faster.
“We’re having a very broad set of discussions about how we can help each other around the world,” said Ford CFO Bob Shanks during an interview this week. “Collaboration isn’t being limited in any way whatsoever, whether it’s different types of technology, product segments or geography.”
Ford also happens to be in similar talks with Mahindra & Mahindra, to broaden an alliance that already led to models being developed for India and other emerging markets, reports Automotive News Europe.
“With VW and Mahindra, we haven’t put boundary conditions in terms of where we could collaborate,” added Shanks. “We’re looking at the strengths and the gaps of each company on both sides of the table and trying to understand how we can help each other.”
According to Morgan Stanley analyst Adam Jonas, Ford will lose $3.6 billion in Europe between 2019 and 2021, thus becoming the least-profitable automaker in that market. This reason alone would be sufficient to as to spur Ford on to strike more creative deals with the likes of Volkswagen and Mahindra.
Issues exist in South America as well, where Ford has lost more than $4 billion since 2012.
“In the world we’re in, where the future is so ill-defined because it’s yet to be created, companies are going to have to collaborate more together,” said Shanks. “We have a history with VW. We get along with them. And if you look at the strengths and weaknesses of each of us, we match up really, really well.”
While the Ford CFO wouldn’t give media members a deadline with regards to reaching any new partnership deals, he did state that talks are proceeding with urgency. He also said that new products coming next year, such as the redesigned Explorer and Escape will begin to show what Ford’s turnaround plan looks like.
“Starting next year, the picture will start to come more and more into focus. It’s something that won’t be a big bang. It will be done as fast as we possibly can, but it will be done in chunks and pieces.”