Skip to main content

The VW and Ford “Collaboration:” In Light of DaimlerChrysler, VW Group ain’t no Mercedes, and Ford ain’t no K-Car, Okay?

There are two powerful entities on Earth, VW Group and Ford, that are now looking to (ahem) “work more closely together” in areas where they can help each other most. Daimler and FCA, the two divorcées of another kind of Germanic-Americano relationship long ago, are mutual friends of both the Fords and VWs, and they send their regards to wish them both well. I explain why.
Posted: November 9, 2018 - 4:30PM
Author: Al Castro


VW Group and Ford Motor Company have made no secret of each other’s desire to “collaborate” on several areas where it can be mutually beneficial to each other. But as the automobile market goes in the direction of full electrification, added to the uncertainties of both the economy and current trade negotiations, it’s becoming clear that the status quo of many different companies and brands once again will not be able to sustain itself under these present conditions. Something(s) is/are going to have to give, so by car companies forming alliances they can better prepare themselves for an upcoming disaster or apocalypse, or a record quarter of profits:

  • According to the International Organization of Automobile Manufacturers, VW Group and Ford are among the top 5 largest and top 5 leading producers of automobiles around the world.
  • Both are considered peer competitors with VW Group being slightly larger in size.
  • Both conduct their business as if they’re careful not to step on one another: one has inherent weakness in any given market where the other has strength.
  • Both are looking to collaborate in areas that can be mutually beneficial.
  • It’s all about the trucks and the electrics: VW has a lot of electrical things Ford desperately needs for their beyond paltry EV plan and Ford has a lot of truck things that can help VW.
  • Although there’s no rumor of an upcoming lovechild, analysts say both should be smart to take out the shotgun and marry now before another economic collapse or tariff war brings the world auto market to a standstill.
  • Ford needs VW more than VW needs Ford: Ford is $158 billion USD in debt, its sock battered, and with no concrete electrification plan in effect, another severe economic downturn combined may lead to demise.
  • Both are keenly aware of the 1998 messy divorce between Daimler Benz AG and Chrysler Corporation, first described as an equal merger that really became a Daimler takeover that it originally was, that ended in a very public and some say unequal separation.
  • Analysts say time is of the essence: Ford may be running out of time, and if it isn’t Ford CEO Jim Hackett announcing some kind of deal, he’ll be instead announcing his departure.

“Something big is brewing,” said John McElroy, host and longtime industry analyst told the Detroit Free Press. “Look, if it isn’t, (Ford CEO) Jim Hackett can't survive. He has got to drop a bombshell on the industry.” As we all wait to exhale, we contemplate what will come of the recent “talks” VW Group has been having with Ford Motor Company. In a meeting that was set to discuss collaboration with vans, the conversation turned to many other opportunities that the two realized maybe there’s more between the two that needs, (ahem), closer examination and discovery. Just don’t use the M word please. It still is what it is. The two sides don’t want people making more than what it already is. So what is it then?

Car collaboration is something of a ongoing phenomenon in the automotive industry. Before he passed away, now former FCA CEO Sergio Marchionne made no bones that he was looking for a merger partner with his company, that after the financial crisis had passed there were no takers, including that infamous ignored email to GM’s CEO Mary Barra, that she left in her inbox. (Now that he’s gone, I wonder if that email is still in there.) What Marchionne was actually looking for, but never was able to get as well, was a joint collaboration between automobile manufacturers so they can pool resources and save a lot of money on development costs. They all did this when no one government was willing to help them set up an electrical charging network worldwide, so people could start using all of the electric cars that consumers suddenly demanded. So this was proof that if they put their minds to it when motivated, car companies can work together to get things done and save money.

Since all the manufacturers were now able to make a multitude of different vehicles of different designs, styles, and uses on basically a half dozen different platforms down to almost a science, there isn’t really a point to spend anymore money to make anymore. Car makers should just pool together resources and pay licensing to make whatever vehicles they want or need, saving them all tons of money. Further development would be to upgrade and improve the platforms. Doing this would also allow the smaller guys in the car making world, like Subaru, Mazda, even Tesla if they wanted to partake, or tiny McLaren the supersports car people if they want, to jump into the pool and save money on a king a new vehicle. A McLaren SUV would be a great vehicle to come from such a place . . .

Marchionne’s plan didn’t catch on, at least not yet. But with the upcoming “collaboration” between VW Group and Ford, that might be about to change. In fact the reasons for their “collaboration” are so convincing, some are wondering why don’t they just take this a step further to formalize it to call it a marriage? That’s when people begin to wince to remember the pain both sides when through in the messy divorce between Daimler Benz AG and Chrysler Corporation, another mixed marriage of Germanic-Americano origins, unfortunately (jeez these mixed marriages so much culture shock!). Two pair of strange bedfellows, both started what they thought were the right mix, good intentions, and a yellow brick road named Hell that laid in front of them. But here’s the thing: this might be another Germanic-Americano alliance, but VW Group ain’t no Mercedes, and Ford ain’t no K-Car, okay?

Auto History: Strange Bedfellows:

They say the automobile industry makes for strange bedfellows, and that was over 100 years ago. There’s the Tale of the Two Henrys: Ask Henry Leland what happened to their Ford brand when there was a fallout between him and Henry Ford for Mr. Ford to pull out and take his name with him. After Mr. Leland brought partners in to help close the rest of the business, they looked around then encouraged him to keep on. Thinking of a new name, he thought “Cadillac” had a nice ring to it, that was once a French noble, Antoine de la Mothe, Sieur de Cadillac, founder of Cadillac, Michigan in 1701. So he renamed it, and the rest is, Cadillac history. Actually the sieur de Cadillac was more about New France which today would make him Quebecer Canadian. Henry, the Leland one, founded both Cadillac and Lincoln for both brands to eventually compete against each other. How that happened he probably doesn’t know.

Ask Jaguar Land Rover when it had to ask Daimler AG to reissue its license to use Gotleib Daimler’s name it had been using for decades to brand certain Jaguar vehicles for the UK Daimler Motor Company, the oldest brand in the UK, yes a Jaguar Daimler, not a Mercedes one. Confusing?

Ask VW Group what it bought back in 1998 that they thought was Rolls Royce including the factory in Cheshire, Crewe, because whatever it was they purchased wasn’t that. VW eventually found out they didn’t finish buying everything Rolls, that BMW beat them first to the doorsteps to Rolls Royce Aerospace in Derby to get the hood ornament and hubcaps and finish that deal. VW Group and BMW Group, who both supplied parts for Rolls Royce Bentley cars for years, some of which were their V12 powerplants, then had to negotiate as to who would make a Bentley and who would make a Rolls Royce. Another two luxury brands who went their separate ways for folks to wonder how that happened. Which brand do you think is now better?

The Car Merger that Dare Not Speak its Name: DaimlerChrysler

This is the Tale of the Marriage From Hell that on Paper Looked Like Heaven. How could we not talk about automotive strange bedfellows without the 1998 DaimlerChrysler merger? I think this is the one that everyone who’s familiar with the VW Ford and DaimlerChrysler storylines bites their lip about the overtures of Ford and VW Group toward each other, to refer to Daimler and Chrysler and says, ”I see what you mean.” I remember the now former Chrysler CEO Robert Eaton explain away at a media conference of the announcement how this was a “merger” of equals, not a takeover, and a new culture, a new company, would be formed.

These two companies, one the inventor of the automobile that has been existence since the mid-nineteenth century with established ways of doing things, the other, what could I say nice about Chrysler they can be remembered for at the time? The 20th century institution that gave us Lee Iacocca who brought them back from bankruptcy, the Chrysler Imperial, and oh, I got one, the PT Cruiser! How could I forget? The K-car! Anyone who knows anything about these two companies starting with how different their cars were, knew, that this marriage was not going to work. One was automotive royalty of high performance quality built luxury cars. The other, was the commoner, the American comeback kid that made these cool tiny vans that saved them from bankruptcy! The British Royal Family equivalent would be as if Prince Harry, the Duke of Sussex, (that’s Daimler) instead of lucking out to marry commoner Meagan Markle sans one or two of her crazy relatives, instead marries one of the Kardashian girls! Pandemonium! Could you imagine what effect that would have on the Duke marrying into that and hanging out at their compound in LA? Whatever that is, that’s what Daimler wanted but ironically feared from Chrysler, that the union was bound for trouble. It’s as if Chrysler was the hot plate Daimler wanted, but every time it put its hands on it, it would get burned, to wonder why they kept doing that? Stop! If it’s too hot don’t touch it! Damn it!

That was Daimler’s dilemma at the time. They were looking for a partner to work with, that had that Yankee freewheeling ingenuity and can-do attitude to help them forage deeper into the American market. Be careful what you wish for. Daimler as a culture is very patrician, Old World, and Old School. Chrysler at the time was about fly on the seat of your pants close to bankruptcy, ironically, that do or die attitude that Tesla presently has, that is/was essential to either’s survival. It seemed every time Daimler got close to the Chrysler institution it feared to try to restrain the freewheeling, it seemed Daimler would get scorched. So what was the point of wanting to marry them?

For Daimler it’s all about the brand, the institution, what each model brings to the brand, where quality and safety are essential, with a folder of patents of seatbelt tensioners, antilock brakes, airbags, blah blah blah. Chrysler, on the other hand, is Product Recall Land, even to this day, and more about the vehicles than the brand, how this new model then was about making something to avoid bankruptcy, and when making money making something until nobody buys it anymore, then offer a giant factory rebate! Oh yeah, that’s right, a Charger and a Challenger are both from Dodge. See the difference?

It was ironic how whatever the few cultural similarities they sought to unify within themselves, the fact that there was a large German American population that settled in the Michigan and Ohio areas that was part of the Chrysler operation and manufacturing institutions, would be the base not large enough to bind the two companies together. Old world reacquaints itself with the new. Familiarity breeds contempt and money is money. Eventually the “co” chairs, Chrysler’s Eaton, and Daimler’s Jurgen Schrempp, dropped the “co”s to be addressed as just “chair.” The majority of the executive-ship under both men were German, but equally German national and American. They tried hard to keep appearances. But suddenly Eaton’s plan for a three year departure for retirement suddenly widdled down to just one.

What were they thinking? "Daimler-Benz totally goes away, and Chrysler totally goes away. The new company will be a totally new company with a totally new culture, much better prepared than either one of us to grow and prosper," Eaton said at that Fall, 1998 event according to Motor Trend in their following July 1999 issue. Schrempp "promised a marriage made in heaven and huge synergies.” The promise may have been made in heaven, but synergies came from hell. That July Motor Trend issue reported the news that the Chrysler part of the marriage was the first to go, as the top lieutenants that made Chrysler the institution it was at the time headed right for the door. Bob Lutz the vice chair and Francois Castaing VP of Engineering headed right to the door right before the announcement. The moves to Ford: Chris Theodore, inventor of the PT Cruiser was the most severe, and Shamel Rushwin, Chrysler’s minivan maker. Parking the car over at GM: even Chrysler’s media front man Steven Harris left for the General. Dennis Pawley, their chief manufacturing boss, just plain retired to consultancy.

And the blood letting of Chrysler began. With Eaton gone, the equal merger that was supposed to be, became the takeover it really was, and with tenacity Schrempp tried to replace anything Eaton about Chrysler. In the meantime, it’s minivan market, one of the appealing things about the Chrysler acquisition turned out not to be not so, and in the end it was becoming abundantly clear that Chrysler was a drain on the Mercedes brand, that people couldn’t envision how a Dodge could also be a Mercedes, and with that the search was on to find a buyer for Chrysler.

Dr. Dieter Zetsche, then the head of the Mercedes part promoted to head of the DaimlerChysler Group in 2000 was the rising tri-star of Mercedes brand who tried to save Chrysler, axing the Plymouth brand, but that wasn’t enough to save the union. His success with the Chrysler acquisition was moderately successful, but he will be remembered more for saving the Mercedes brand from the smearing by the stains of Chrysler. He is currently the CEO of Daimler Group AG. Thanks to him, the dowry gift of divorce he gave to Chrysler was the LX Platform that makes the Dodge Challenger and Charger, and the iconic Chrysler 300 sedan. Chrysler has since made a ton of money of that platform which is essentially an older generation of the Mercedes E Class. The Mercedes Sprinter is also a joint collaboration (how ironic). Thank you Dr. Zetsche.

With the Chrysler bleed out, some say this lead to the free spiral of Chrysler which contributed to its second bankruptcy in 2009. A ten year drain they never recovered from that when Daimler spit Chrysler out, it made the Chrysler problem look worse to the lead up of the second bankruptcy less than 10 years later, in 2009.

The Pentastar Hood Ornament and the End of a Marriage

For years since it was created back in 1962, thus years before the merger, Chrysler used to put a hood ornament on their cars for all their brands, that was a chrome pentagon design and a pentagon cross within it, that looked similar to the iconic Mercedes tri-star hood ornament but in a pentagonal shape. Their differences were distinct, but with the merger many saw the uncanny similarities. It was the mentioning of the similarities that we almost saw the demise of the Pentastar, but definitely the end of the marriage. The Mercedes one is the tri-star of Mercedes Benz brand, representing the three parts of the earth they supplant power to: land, sea, and air. The Chrysler one is the Pentastar, the official logo of the Chrysler Corporation, that eventually became the logos for Dodge and Plymouth too. In its multi-dimensional form, the hood ornament being one version, it represents timelessness and a globalist reach the Chrysler brand desires in its future. Ironically today it is confined to being a North American brand only. This is also why I believe the FCA is looking to replace this logo.

I believe their similarities were purely coincidental each one existing for either years or decades apart from the other. Until the day came on the news that someone in Stuttgart found out about the hood ornament from Auburn Hills, and ordered them off all Chrysler branded cars and stamped or placarded on all branded engines in production moving forward. You see, through that entire time until 2007 when Chrysler and Daimler finally parted ways, Daimler went through such a process to make sure that both marques were kept separately. It is interesting, how people surveyed thought that Chrysler was a drain on the Mercedes brand, but most people surveyed at the end of their existence didn’t know Chrysler was owned by Mercedes Benz. So, the merger was successful at least at one thing. The inevitable separation of the brands!

I could see the exterior of the vehicles, hand down. But you would think at least the engines would be stamped or labeled a Mercedes Benz product. They were carefully orchestrated to be not so. And this is what the Daimler people could not understand with their relationship with the people on the Chrysler side, that if you are going through such lengths to hide the things that unite us, then you’ve given us reason to divide us. What’s the point of going on?

The hood ornament was prolific, but I believe this was the moment we all realized the DaimlerChrysler Motors Company LLC was a mistake, it should never have happened, and that Daimler never saw its Chrysler part as being an equal onto itself. And I love the Mercedes brand, I do, to respect that Mercedes Benz is the inventor of the greatest invention of the Industrial Revolution. It is not your precious iPhones that deliver themselves to your Apple or cellular retailer, but a vehicle of some kind that ships it there! That’s the bottom line no one can deny!

And for Daimler Benz AG, the storied car company that started with Karl Benz, and his wife Bertha, who told him enough of his invention tinkering, to bring his Patent Motorwagen to town and get started making many of it, the company he left behind has become so elitist patrician about itself, I don’t think it’ll ever see another entity on earth that could be the equivalent of itself.

Their company motto and ethos is, “the best or nothing.” Mercedes needs to be careful. Car history has proven a company can be robust and alive at one moment to be dead and extinct in another. The car industry does make for strange bedfellows. With endless possibilities who couldn’t see the feasibility of one day the CEO of a future Chrysler Corporation coming to the office of the CEO of a future Daimler Group AG, for the Chrysler CEO to stake his claim to Daimler, acquired after receivership. The ones you meet in the way up are the same ones you meet on the way down. That “nothing” in the Mercedes’ motto, could one day be THEM. Be kind to the universe. The little people too.

Incidentally, when Dr. Zetsche was finally able to sell Chrysler to Cerberus Capital Management in 2007, and one of the first things they did was reinstitute the Pentastar hood ornament on all appropriate Dodge and Chrysler vehicles!

The Difference with a VW and Ford Union

People look at VW and Ford and then at Daimler and Chrysler, to wonder what it is that they both can do differently to learn from the mistakes of DaimlerChrysler. On financial paper, a DaimlerChrysler and a VWFord seems like a match made in heaven. For decades, Daimler wanted to be a major player in the North American market, that it formed an alliance with Nash in the early 1960’s to enter the North American market through their dealer network, before Nash went bankrupt. But it too like VW at the time in 1998 had established their own presence in the American market to not need anything else really. They say that opposites attract when in actually it is complements that actually do a better job, like complementary angles that makes for a more perfect fit of a linear plane of existence. There is a better linear plane of existence between Ford and VW than there was between Daimler and Chrysler. Daimler and Chrysler were complete opposites that had no business being together.

Ford and VW complement each other. They are both industrial powerhouses and automotive royalty in their own rights and ways and both recognize that. They are both equals that Daimler and Chrysler were not. And this is more important, as humans do with each other, so must their car companies, and that’s about how they treat one another. It seems VW and Ford consider each other to be each other’s peers. I guess this is my way of saying in a corporate sense, that I believe they’ve fallen in love with each other.

And they seem to treat each other that way. If you don’t have that, then you have nothing. It won’t work regardless. So I say, let them be happy. The problems VWG faces alone are challenging but manageable. Ford’s problems are daunting. Together their problems make their virtues join forces, and with that like two people in love with each other, there’s nothing on earth that can stop them if they are determined and their love is there. Whether it is about Romanticism or Corporate culture, love truly conquers all. And time will prove it.

Losing Money on Both Ends: The Problems of Gas Car Company Electrification Changeover

This is what VW Group and Ford faces moving forward into the 21st Century. Trying times are coming ahead for the auto industry. There will be another round of brand fatalities as there were at the turn of this century. One of the two in our budding couple is prepared. The other may die without the other’s help. Does love truly conquer all? Will love be enough to save two and not just one? This is where we’ll find out if they were meant for each other and if they can survive together or without the other.

For the auto industry, it’s now all about electrification and a double-sided losing proposition. I believe what is going on here is that car companies are starting to finally realize what they must go through to change their business model from selling a full portfolio of gasoline cars to a full portfolio of electric cars as we continue through the century, and for them to survive from beginning to end. And it doesn’t look good. There will be casualties if not outright fatalities.

In theory and in one or two examples of actuality, an electric startup has a better chance of survival than a legacy car company does at the finish of this changeover, as a startup uses one business model and one supply chain or one series of supply chains, to make and sell electrics. They have to make sure once they have the capital that all the resources are at hand to coordinate into production. Their biggest hurdle is raising enough capital to get their first vehicle into production.

A legacy car company has to create a second business model usually using the same brand, but now it has to sell completely two different kinds of products in completely two separate and different ways. This is the thing: each product type is going to incur a tremendous loss of money, one on the front end as they establish it and get it going with new supply chains, new factories, and new equipment, that’s the electrics; the other, the loss will come toward the end of its existence, when the last few gasoline cars are made to close out the gas car market; those are the gasoline cars. Whatever supply chains, factories, and assets not useful anymore will have to be closed out and/or sold, like a liquidation or bankruptcy.

In order to complete this entire process of changeover, a tremendous amount of money is going to have to be spent in order to keep each type sustainable if not profitable, and for each car maker to survive when done. Should there be another severe economic downturn during this process, it will make matters worse for the participants. So there will be car companies that will not be able to survive this changeover.

The Electrical Changeover Prognosis for Smaller Car Companies

The smaller ones, like Subaru or Mazda, unless one of their majority stakeholders steps in, they risk being in a heap of trouble. This is one of the reasons why neither of these two companies have any kind of robust electrification plan. It costs too much money to front end a portfolio of electric vehicles to incur a loss at the backend by eliminating gas ones. Only the larger car companies flush with enough cash will make it through. And it is almost certain that the two Goliaths, GM ad VW Group, will make it to the finish line. Those two are poised to become the car companies of the 22nd century. But maybe not so with Ford, at least as a stand-alone brand.

Ford prepared itself for the economic crisis back in 2008. It was years in the making that they read the tea leaves of the sub-prime mortgage crisis, and they they sold off all of their foreign luxury brands to have serious walk around cash money. This is why they didn’t need a bailout back in 2009. In its current financial position of being a staggering $158 billion USD in total debt, it is not prepared either for the full electric conversion it needs to get through on the other side, neither for a financial crisis like the possible sub-prime auto loan bubble growing exponentially right now, should this possible crisis or another one arise during this electrification process. They need help, and the sooner they get it the better off they’ll be.

Chrysler got their wake up call sometime last year about electrification. This is why now the late former, then the FCA CEO Sergio Marchionne decided that FCA should finish what it set out to do post bankruptcy, and finish paying off all their debt before incurring another massive new one over electrification. FCA finally finished doing that just before Mr. Marchionne died a few months ago.

This is also why FCA’s electrification plans of their vehicle portfolio were considered by some to be paltry or insufficient. Mr. Marchionne apparently felt the pain of changeover can be better handled when changing over in small pieces, only when necessary, as opposed to doing a lot of the portfolio or most of it right away.

The Problem with Ford

Apparently Ford must have gotten this same kind of wake up call earlier this year, that unlike GM with their 5 year plan and execution of it, Ford grossly underestimated what was necessary to changeover, and now requires some kind of assistance to make it happen. I believe this is one of the reasons why they cancelled all those passenger cars from their portfolio for North American sales earlier this year. Ford went into survivalist mode to decide if they’re going to make and sell anything moving forward worth eventually electrifying, it matter as well be what they make best, and that’s light duty trucks. If there’s ever a time they’re going to need the virtues of the F-150 Pickup like Tesla needs the Model 3, it’s now.

Ford also tried this strategy on their few cars that sell most, thus well. This is about the retention of their halo, the Ford Mustang, and plans to make variants of the car. They decided that their first full production BEV will be a CUV variant of this vehicle. Its naming and unveil isn’t going well, as it’s obvious that the Mustang decision makers aren’t in tune with their base consumers and fans as to what the Mustang brand means or what electrification is.

Instead of showing what an electrified Mustang can do by making a current production car fully electrified, Ford chose to show flashy clips of what looks like a CUV or a prototype variant compared to a present in-production model. They also considered naming the vehicle “Mach-1,” homage to the iconic 1968 car that started that moniker. That faced outright backlash on both accounts. The message of electrification about being more power, torque, and speed was mired by Ford’s association of electrification with soccer moms in CUVs. It seems Ford has to show electrification to their customers with vehicles they already know and drive. The message isn’t getting through and is now facing cyber backlash. This is one of the reasons I also believe for the very first time at a major car show event, that an auto maker of performance cars decided to finally stop resistance and fully electrify a current in-production car, instead of having a tuner shop do it. The result is Chevrolet making the special edition Chevy eCOPO Camaro, the 2019 eCOPO shown at 2018 SEMA.

This is also why we haven’t seen Ford make any major moves toward tooling or refitting a factory for EV production lately. They haven’t accomplished much in establishing a supply chain for battery production, that they really need to have their own battery factories, not just supplies, for the kind of scale they’ll need to survive. It seems their plans for their first BEV CUV, which will be their first full production full electric vehicle, the Mustang variant, is in limbo. We still have no idea what it looks like, or what they will call it, and frankly it wouldn’t surprise me if they don’t either. Their “first all electric will have a 300 mile range and will be better than Tesla, and is coming before 2020”, said Ford CTO Raj Nair specifically to Business Insider back in 2015. What are they doing to make it happen? I think they’re waiting because they now realize they can’t do it without help.

The Problem with VW Group and Solutions that help Ford

Here enters VW Group. Although hammered by the diesel scandal, VW Group is still a powerhouse in the industrial world not to be messed with, one of the three largest car companies in the world, the largest by sales of 10.7 million vehicles last year, sixth of the Fortune 500, of the 190 countries that exist on the planet, VW Group has locations in 150 of them, with 100 production facilities across 27 countries. They have assets of $422 billion, USD, of which $109 billion is a flush of cash. “We are financially robust and strategically well-positioned,” the then but now former Group CEO Matthias Müller said at the 2017 Roadmap E presentation. “Things are really moving. And we have plans for much more. A change of course for the Volkswagen supertanker – full speed ahead to the future!”

In spite of record outlay of payments from the Dieselgate Scandal, VW saw record earnings in FY2017. VW Group is in the process of implementing Roadmap E, their plans to “expand production of electric vehicles worldwide on a massive scale.” By 2022 VW Group will have 16 worldwide electric vehicle production facilities, three presently, in two years, nine factories, making by 2025 a total of 80 electric models from these 16 facilities for the entire group. Starting in 2019, VWG will have a new VWG branded product every month. They’ve spent €20 billion on battery technology and partners to help manufacture batteries and the packs that hold them together in the vehicle’s battery tray.

So it’s quite clear that VW Group has something that Ford needs. And Ford has something VWG wants. But let’s make this clear: Ford needs VWG more than VWG needs Ford. Hey sailor, how about a trade? Love. It’s a wonderful thing!

The Mating of VW Group ad Ford: Ones Got Ones Not

First off, one of the nice things we don’t have to worry about either save for Bentley, which is a special brand off to the side in the VWG portfolio, is that neither has a hood ornament to battle each other over if there ever is a lover’s quarrel. Both logos are round to bounce off one another, unlike the Chrysler Pentastar whose pointy edges doubles like a martial arts weapon! Whew! We got that out of the way! Now lets see what one’s got, and the other, not:

What’s so sweet about a VWG and Ford pairing is that both have exceptional money making portfolios with compelling models. It’s clear both know how to make vehicles and make them well. But what’s so exceptional about each portfolio is that they are strong in the markets they’re used for and each other’s portfolio overlap in very little places. I’ll try to keep it gender neutral, but no question or doubt about which brand would be the alpha, this is truly a more synergetic and symbiotic relationship than the Daimler Chrysler experience and why such a mating would truly be a combination of equals. In this instance one brand would simply be the sovereign of the People’s Passenger Cars, thats VWG’s house brand of Volkswagen we all know, maker of the Beetle, and the other, the sovereign of trucks, that’s Ford. Mustang could even have its own playpen as a bastard love stepchild of either brands’ dealerships as a boutique item to adore.

In one market where one is weak like Ford is in China, and VW is here in NA, the other is strong, like VWG is there, and Ford is here with their trucks. Whether branded blue oval or the People’s Trucks, there are Ford vehicles that need to be sold in parts of the world VWG can help Ford do, and both can make a profit. VW is strong in Asia, South and Central America, and Europe, and lacks vehicles in the high-profit full-size pickup category.

Ford desperately needs to electrify its portfolio and have it steroided up, including their trucks AND Ford Mustang ASAP! In fact, Mustang should have been fully electrified for SEMA and the LA Auto Show by now, and by Ford, not a tuner shop! Ain’t no one better on the planet to help them do that than VWG!

The only casualty I could see down the road like a pair of headlights coming onto antlers, is frankly, Lincoln. Between, Audi, Porsche, VW housebrand covering the lower end of luxury and frankly doing it well with Phaeton, Touareg, and Atlas over the years, and VWG’s darling, Bentley Motors of Cheshire Crewe, taking care of the upper strata, I really don’t see how Lincoln can fit into this arrangement very well. There’s already more than enough luxury with the one English and the rest, the German brands carry. And let’s face it, Ford for years struggled with Lincoln to simply not know how to build, and cherish a luxury flagship halo car, like cancelling them at the first sign of trouble, or sending them out for airport duty! Yikes! In the VWG world it seems like Audi is their squad leader of the luxury marques, their sergeant to tow them all in line, yes including Bentley too as there seems to be a pecking order and who you make cars for don’t count! Starting with technology they share with her VWG sisters, I say let and leave it to Audi to run the show as to how to take care of he VWG luxury brands. And if there’s blowback to the extinction of Lincoln, which I could make a case that every penny that Ford saves means a better chance of their survival past electrification, then Lincoln should be assigned in the direction they were already going toward anyway, and that’s luxury fleet service: livery, airport transfer, fleet, funerals, and weddings so that the rest of the VWG brands are spared from doing any of that.

So the natural inclination learning from the past, knowing the countries and cultures involved, is to take things slow. But this is the business world. This involves the auto industry, and the electrification of it, that events are always quickly changing. To some, this means the opportunity is right and the time is now. “Ford is already flirting with joint ventures with VW,” said Jon Gabrielsen, an independent market economist who advises automakers and suppliers as told to the Detroit Free Press. “So, the immediate question before Ford now is, does one do a difficult but orderly marriage now or wait to be forced to do a disorderly fire sale under duress later? I see millimeter steps at a time when they should be taking a massive leap."

But the drawbacks still are worth mentioning again. In Light of DaimlerChrysler, VW Group ain’t no Mercedes, and Ford ain’t no K-Car, but they are what they still are, one is very American, the other, still very German, that the cultures will intersect to hope differences are easier to culturally resolve with the Saxons than perhaps it was for the Midwesterners trying to get along with the Baden-Wurttembergers. In the end as Dr. King once said, “we all came on different ships, but we’re in the same boat now.” And we now live in the Era of Globalism. This includes those from the Old World too. We’re all in this together.

I am a hopeless romantic. What other reason were we put here, but to serve humanity, and to love one another. Whether it’s about exploding Pintos or polluting Jettas, we learn from our mistakes, pay our debt to society, and move on. Forgiveness, oh God, is that essential. I wish the union however it is formed, and wherever it goes, good health and happiness. And love!

What do you think of the pairing of VW Group and Ford Motor Company? Let us know below!

Photos courtesy Wikipedia Media or VW Group’s Facebook Page


DeanMcManis (not verified)    November 10, 2018 - 12:47PM

The Ford-VW pairing is a good match for the reasons that you stated. It will be interesting to see how the corporate egos, marketing, and engineering teams gel.

akirby (not verified)    November 12, 2018 - 2:50PM

$158B in debt? Holy financial misinterpretation Batman. Based on their last quarterly report, Ford Motor Company has $26B in CASH and only $16B in debt. Dealers have seen the Mach 1 BEV and the reason it's a utility is because that's what people are buying now. Tesla has already proven you can't make a profit making BEVs yet. Ford is going all out with hybrids and plug in hybrids in all their most popular non commercial vehicles. We'll see how they execute but it's hard to fault the plan if you take the time to understand it.

Al Castro    November 13, 2018 - 3:37AM

In reply to by akirby (not verified)

“Great Caesar’s Ghost Jimmy we have a wise guy who wants to play word games with what we write in the paper!! I don’t know what happened to $158b where it came from but here’s From Statistica for 2017 and it’s close enough and I quote: “This statistic shows Ford's total debt from the fiscal year of 2007 to the fiscal year of 2017. The Ford Motor Company, headquartered in Michigan, is one of the biggest car manufacturers worldwide. In the fiscal year of 2017, Ford reported total debt of about 154 billion US dollars.” We report the news we don’t make it and leave that to readers to decide what that means. If you carefully read the piece that you didn’t, it was about the collaboration with VW is all I cared, not analysis into Ford debt ok? To me total debt is total debt. Thank you for wasting your ink about Mach 1 and what other silly point you had to make? Tesla profit! Oh yes, that’s something they did you apparently aren’t aware of! Now you are. And the reason Ford is all about PHEV and not BEVs is this article. They’re broke. Now go sit it in the corner and read the article again!!” —Mr. White

akirby (not verified)    November 13, 2018 - 11:38AM

In reply to by Al Castro

It's not word games - that statistic is misleading and only half the story. Why don't you go look at Ford's financial statements instead of relying on Statistica? The overwhelming majority of that debt is from Ford Credit. What Statistica doesn't tell you is that debt is offset by consumer car loans. Here is the data as of 3Q2018:

Ford Credit Receivables (what customers owe Ford Credit for vehicles they financed): $144B to $152B depending on which number you want to use (net or managed)

Ford Credit Debt: $138B

That means that they have somewhere between $6B and $14B more in assets than in debt. Ford Credit is a bank - they lend money so of course they have big debt but they have even bigger assets to offset it.

Ford is in great shape financially with profit margins of 8.8% and $1.6B in profit in 3Q alone. And not counting Ford Credit they have $23B in cash and total $37B in liquid assets against $15B in debt.

They are not "in trouble" financially. They are at risk of greatly reduced profits if new vehicle sales fall off a cliff like they did in 2008 and truck sales take a nose dive since that's still a large portion of their overall profit but that seems unlikely.

There are plenty of reasons for Ford to collaborate with VW but it's not because Ford is in financial trouble.

Al Castro    November 13, 2018 - 6:43PM

What planet are you based from? Do you not have news feed on your phone? Here, because you’re off topic, the story is about the collaboration, not Ford financials, that Ford needs VW not the other way around, and there’s a reason you can’t see that I can’t help you or force you to see, that Ford needs the VW platform to make a real electric car, a BEV, and not 2006 technology of a PHEV ok? Now, I’m a little overwhelmed with the other articles I need to publish, so type in “Ford Financial Trouble” into Google and here are two of the top five: and there’s this one: Ford doesn’t consider buying BEV licenses because they’re financially healthy. The plug in hybrid should’ve been phased out by now they’re transition vehicles as we’re beyond lith ion to now start using solid state batteries. If a car company is using plugin hybrids that’s because they’re being cheap or don’t have money for BEVs. That’s Ford. They’re in trouble. They can’t even pay a dividend to their family membered stockholders! Whatever your position is with Ford, financial or otherwise, get your head out of the sand. Stay on topic. That’s it. Im done with this nonsense.

Akirby (not verified)    November 15, 2018 - 6:27PM

In reply to by Al Castro

If you think BEVs are going to be highly profitable or sell in large numbers in the next few years you’re dreaming. Until prices are in the $20Ks and you can recharge anywhere in 10 minutes with a 250+ mile range they’re not going to replace ICE vehicles. A plug in hybrid gives you all the EV power most people need on a daily basis with none of the drawbacks of a BEV.

The reason Ford is slow with their BEV is that it won’t make much money right now so it hasn’t been a big priority. It’s essentially just R&D for the future and some good PR. Ford knows far more about electrification than VW does.
Ford will make far more from a hybrid F150 and Mustang and a PHEV Aviator than they will from a BEV.

Ford needs VW for South America and other non North America markets where it’s struggling and VW needs Ford’s commercial vehicles. It’s not about BEVs.