Ford, VW consider partnering on vehicles

Ford Motor Co. is eyeing an alliance with Germany's Volkswagen AG in a deal that could include co-developing commercial vehicles.

The automakers announced late Tuesday they had signed a memorandum of understanding and are "exploring a strategic alliance designed to strengthen each company's competitiveness."

Ford and VW said in a joint statement that they are exploring potential projects, including commercial vehicles. Reports earlier Tuesday implied that the two companies were interested in collaborating on vans and pickup trucks, but a Ford spokeswoman said it's too early to say what the final outcome of the partnership would be.

VW introduced a concept vehicle for what would be its first-ever pickup truck at the New York Auto Show earlier this year.

The deal between Ford and VW won't end in a merger, the companies say. The alliance would not include equity arrangements, including cross-ownership stakes.

"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," Jim Farley, Ford’s president of global markets, said in the statement. "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."

The Blue Oval is in the middle of an aggressive cost-saving effort that includes cutting sedans, slashing operating cost and a plan to reduce capital spending from 2019 to 2022 by $5 billion. Ford also hoping to ingratiate itself with investors as its stock price still hovers around $11.

"Markets and customer demand are changing at an incredible speed. Both companies have strong and complementary positions in different commercial vehicle segments already," Thomas Sedran, Head of Volkswagen Group Strategy, said in the statement. "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, Europe’s largest automaker, pleaded guilty last year to three criminal charges related to the Dieselgate scandal — a decade-long conspiracy to evade U.S. emission standards. The company was fined a record-setting $2.8 billion and faces three years of probation.

In 2015, the company admitted to programming diesel cars to trick emissions testers into believing the engines released far less pollution than they actually did. The so-called "defeat devices" allowed vehicles branded "Clean Diesel" to work properly during laboratory emissions testing. But in normal driving, the cars were found to emit up to 40 times more smog-causing nitrogen oxide than legally allowed.

Volkswagen and Ford ventured into South America together in 1987 when the companies agreed to make cars together for Brazil and Argentina. The joint venture, known as Autolatina, dissolved in 1995.

nnaughton@detroitnews.com

Twitter: @noranaughton