Ford expands talks with VW and Mahindra to cut costs
DEARBORN, Mich: With its stock trading near a 6-year low late last month, Ford Motor Co CEO Jim Hackett gathered the automaker’s top 300 executives near its headquarters in Michigan for a global leadership meeting. Hackett’s message: Ford must put in motion plans to restructure its business now in order to secure promised costs savings, Ford executives present at the meeting said.
“We have clarity of purpose and now it’s time to take action,” Hackett told Reuters in an interview.
A key part of that plan to save money calls for Ford to deepen partnerships with other automakers around the world to share factory floor capacity and develop vehicles together, Ford executives told Reuters.
Specifically, they said Ford is engaged in talks with Germany’s Volkswagen AG and India’s Mahindra about expanding product and technology alliances. With Volkswagen, discussions are focused on how to expand a commercial vehicle tieup they previously announced to include collaboration in South America and Europe - where Ford is losing money and co-develop other types of vehicles, according to a Volkswagen executive and two sources familiar with Ford’s thinking who asked not to be identified.
Pablo Di Si, chief executive for Volkswagen in Latin America, told Reuters the companies are studying a partnership in Brazil and the talks are “advancing positively,” although he did not expect an announcement until 2019.
A VW spokesman declined further comment on the alliance discussions. An expanded alliance would give Volkswagen access to some of Ford’s most profitable vehicles, including the Transit commercial vans and Ranger compact pickup trucks, said the two sources. VW could also help Ford strengthen its money-losing South American and European operations by combining vehicle production in those markets, the sources said.
Separately, product sharing talks are underway with Mahindra & Mahindra, including using the Indian automaker as a benchmark to bring down supplier costs in the region, two other people familiar with Mahindra’s plans said. The first vehicle from the platform they are jointly developing will likely be launched in 2020, they added.
A spokesman for Mahindra did not respond to a request for comment. The twin efforts are meant to help remake Ford in conjunction with the $11 billion restructuring it outlined for the next three to five years. Ford needs to improve profitability because it is investing billions of dollars to develop electric and self-driving vehicles, and gearing up for a major roll out of products over the next two years.
Hackett, who recently spoke with the heads of Volkswagen and Mahindra, told Reuters the alliance talks are going well and hold a lot of promise for Ford. He declined to comment on specific deal structures being discussed or locations, however. —Reuters