Increasing developments cost and tougher market competition has led Volkswagen AG and Ford Motor Company to announce a strategic alliance on light commercial vehicles back in June 2018. The talks were first revealed back in June 2018, but it was recently announced that Ford will be responsible for developing both companies’ next-gen pickups – due in 2023.
VW and Ford specified that their alliance ‘would not involve’ either company taking an ownership stake in the other. Rather, they said they are “investigating several joint projects, including joint development of a range of commercial vehicles to better serve the evolving needs of customers globally”.
Could we see the Amarok and Ranger sharing the same platform?
The costs involved in getting a new pickup truck from the design studio to rolling off the production line start in the region of €1.5bn, which is slightly higher than standard passenger cars due to the tougher chassis and parts, fewer ‘crossover’ components with other vehicles and the extra technology involved.
However, as the global pickup truck market is significantly smaller than passenger cars, it’s difficult to recuperate this R&D (Research & Development) cost through volume. Therefore, many manufacturers share the costs through joint ventures; think Nissan and Mercedes-Benz, Mazda and Isuzu, Mitsubishi and Fiat.
This has proven to be quite an issue for Volkswagen. The German manufacturer financed its Amarok pickup development by itself but recuperating the costs will take much longer due to its limited market availability (the Amarok isn’t sold in either of the world’s largest one-tonne pickup markets; Thailand or USA) and the lower sales volumes in the markets where it is present.
In Europe for example, the Ford Ranger is the best-selling model whereas the Volkswagen Amarok isn’t even in the top five.
What the manufacturers say…
“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.”
Dr. Thomas Sedran, Head of Volkswagen Group Strategy said, “Markets and customer demand are changing at an incredible speed. 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.”
When and where?
The new models will go into production around 2023 but big question is where the pickup will be built. Currently, European versions of the Ford Ranger are built in South Africa where the capacity was recently increased by 25% to 125,000, while the VW Amarok is built in Hanover (also the home of the VW Transporter) which has a capacity of around 90,000 for pickups.