Saar: The alliance would not involve equity arrangements, including cross-ownership stakes.

American carmaker Ford has signed a Memorandum of Understanding (MoU) with the German auto giant Volkswagen to explore strategic alliance in several fields. The main aim is to strengthen each company’s competitiveness and better serve customers throughout the world.

The talks are in the preliminary stages and more information will surface as the companies progress further in this potential collaboration. Presently, several projects across a number of areas are under discussion. One of the projects revolves around the possibility of co-developing a range of commercial vehicles. While that doesn’t concern India at the moment, collaboration in the passenger car segment can’t be ruled out. Whatever the project be, this strategic alliance between Ford and Volkswagen would not involve equity arrangements, including cross-ownership stakes.

Ford Headquarters

Upon signing the MoU, Jim Farley, president of global markets, Ford Motor Company, said:

“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. 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.”

Thomas Sedran, head, Volkswagen Group Strategy, added:

“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.”

Volkswagen Headquarters

It is worth noticing that the first collaborative effort might just be in the commercial vehicle segment. That said, other areas such as passenger cars for developing markets cannot be ruled out. Volkswagen in India hasn’t had the best of fortunes to date. On the other hand, Ford has a very small market segment in India, which the company has been struggling to expand.

Ford inked MoUs with Mahindra in March this year to develop SUVs, an electric vehicle (EV) and work on connected car solutions. Volkswagen, on the other hand, has handed the torch to Skoda Auto India to lead the Group’s way in the Indian market. The Octavia-maker was in talks with Tata Motors to co-create products for the Indian automotive market. But that alliance did not go through between the two.

It is possible that with this new MoU between Ford and Volkswagen Group, the duo might work on a plan for India, which is one of the fastest growing automobile markets in the world.