Potential VW, Ford Merger Could Be The Industry's Largest

"Both VW and Ford have been very clear: any strategic alliance would not involve equity arrangements, including cross ownership stakes."

The Memorandum of Understanding signed by Ford and Volkswagen in June this year laid the foundations of a strategic partnership between two of the largest automakers in the world. Initially, the manufacturers are expected to just focus on co-developing an array of commercial vehicles, but will also work to "better serve the evolving needs of customers." According to some industry specialists, this could mean that Ford and Volkswagen are pondering a full-fledged merger or an equity swap, which could form the largest single company in the industry.

An analysis by The Detroit Bureau points out that a partnership reaching far beyond the commercial vehicle market could be very beneficial for both sides. The German company could benefit from Ford's strong positions on the American market, especially in the pickup and SUV segments, while the Blue Oval could use some help in Europe, Latin America, and China, where it's currently weak.

Also, the two manufacturers could share successful platforms and help each other expand model lineups. For instance, Ford was once a pioneering brand in the EV technologies but is now lagging behind Volkswagen, which has an aggressive electrification plan. In return, Ford could help VW recover its image in the United States after the Dieselgate, for example, with a Ranger-based compact pickup.

According to our source, the timing for a potential deal is now perfect. Ford is facing a number of major challenges and Jim Hackett, appointed CEO of Ford last year, is working on what some describe as a "radical" transformation of the company. Parts of this metamorphosis include an unprecedented abandoning of traditional sedans and coupes in the United States and a push into electrified and autonomous vehicles combined with a massive expansion in the pickup, crossover, and SUV segments.

People close to the matter, described by The Detroit Bureau as "observers," say talks between the two companies are already happening. Whether they will be productive and will result in a larger partnership between VW and Ford, only time will tell.