Ford and Volkswagen To Collaborate on Pickup Trucks

Increasing development costs and tougher market competition have led Volkswagen and Ford to announce a joint venture on light commercial vehicles. The talks were first revealed back in June 2018, but it was recently announced that Ford will be responsible for developing both companies’ next-generation pickups due in 2023.

Volkswagen and Ford detailed 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.”

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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 (£1.3bn) which is slightly higher than standard passenger cars thanks to the requirement for a tougher chassis and components, fewer ‘crossover’ components with other vehicles, and the extra technology involved such as all-wheel-drive and multiple differentials.

However, as the global pickup truck market is significantly smaller than passenger cars, it’s difficult to recuperate these research and development costs through volume. In the same way that Ford and Volkswagen are planning, many manufacturers share the costs through a joint venture; think Nissan and Mercedes-Benz, Mazda and Isuzu, and 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 and the USA.

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Low sales volumes in the markets where it is present compound the issue. In Europe for example, the Ford Ranger is the best-selling model whereas the Volkswagen Amarok isn’t even in the top five.

Volkswagen Amarok production line in Hanover factory ahead of Ford joint venture
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.”

Ford Ranger production line in Silverton factory ahead of Volkswagen joint venture
When and Where?

The new models will go into production around 2023. 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 Volkswagen Amarok is built in Hanover, which has the capacity to build around 90,000 pickups annually.

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