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Update: Volkswagen, Ford confirm alliance for commercial vehicle development

Volkswagen AG and Ford Motor Co. on Jan. 15 confirmed reports that they will form an alliance to develop commercial vans and medium-sized pickups for global markets, beginning as early as 2022.

The two automakers in June 2018 signed a memorandum of understanding to explore a possible tie-up for the joint development of commercial vehicles.

They announced that the alliance, which does not entail cross-ownership between the two companies, will be led by a joint committee overseen by both Volkswagen CEO Herbert Diess and Ford CEO Jim Hackett.

The partnership will enable the two car companies to share development costs, leverage each other's manufacturing power and improve the competitiveness of their vehicles, while keeping distinct brand characteristics.

Ford will build medium-sized pickups for both companies, as well as larger commercial vans for European customers. Volkswagen intends to develop and build a city van.

"With demand for medium pickup trucks and commercial vans expected to grow globally in the next five years, this alliance will provide us with more industry-leaning products we can offer to address that growing demand," Hackett said on a conference call Jan. 15.

More details will be announced in the coming weeks on how the alliance will impact specific regions, Hackett said.

The commercial vans will be manufactured for Europe, and the pickup truck will be specific to South America, Africa and Europe.

Hackett suggested there could be a collaboration between Ford and Volkswagen in China, as well.

The Ford CEO said there are no plans to reduce its workforce at any of its plants as a result of the alliance.

Volkswagen CEO Diess said "sharing platforms and plants with Ford provides competitive scale effects in the segment."

The partnership is expected to deliver improved annual pretax operating results from 2023.

"Over time, this alliance will help both companies create value and meet the needs of our customers and society," said Ford's Hackett. "It will not only drive significant efficiencies and help both companies improve their fitness, but also gives us the opportunity to collaborate on shaping the next era of mobility."

Volkswagen's Diess said the arrangement would be "a cornerstone for our drive to improve competitiveness."

Volkswagen and Ford added that they have signed another MOU to investigate further collaborations on autonomous vehicles, mobility services and electric cars.