Volkswagen, Ford alliance poses challenges

DETROIT — The budding alliance between Volkswagen Group and Ford Motor Co. could be the start of a fraught friendship.

With apologies to “Casablanca,” the VW-Ford collaboration announced Tuesday during the Detroit auto show sounds smart on paper but will be much harder to pull off in practice.

These are two companies that desperately need to get more efficient. And they each can help fill a void, though they are not taking ownership stakes in each other.

VW needs pickups, which Ford can help with. And Ford needs to fix its European operations, which VW can help with.

Consumers won’t notice much in the beginning. Eventually, they may work together on self-driving vehicles and electric cars. Maybe someday you’ll ride in a car jointly developed by VW, the world’s largest automaker, and Ford.

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But for now, the partnership is likely to focus primarily on cost savings. Maybe they can help each other boost profits as they invest in much-needed current products and costly technology of the future.

“Volkswagen and Ford will harness our collective resources, innovation capabilities and complementary market positions to even better serve millions of customers around the world,” VW CEO Herbert Diess said in a statement. “At the same time, the alliance will be a cornerstone for our drive to improve competitiveness.” 

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It makes sense that they want to team up. But if history is any indication, these types of alliances often end in ugly breakups:

Daimler and Chrysler 

Speaking of German automakers establishing ties to American companies, Mercedes-Benz maker Daimler-Benz’s 1998 acquisition of Chrysler turned into a clash of cultures.

Under Daimler, Chrysler floundered and executives failed to deliver the merger benefits they had promised.

Two years after Daimler offloaded Chrysler to private equity firm Cerberus in 2007, Chrysler nearly liquidated before getting a federal bailout and a lifesaving deal from Italian automaker Fiat.

Nissan and Renault

Until recently, this partnership was going swimmingly — or so it seemed.

Japanese automaker Nissan and French automaker Renault have based their global alliance on joint vehicle development and production to grow sales and profits. The alliance — which recently added Mitsubishi — has helped Nissan get back on its feet, seemingly displaying the potential of global partnerships in the auto industry. 

But November’s arrest of alliance chairman and former Nissan CEO Carlos Ghosn in Japan on accusations of financial fraud has exposed fractures in the partnership.

“The dynamic, competitive nature of this industry will reward collaboration while punishing a siloed approach,” wrote Karl Brauer, executive publisher for Kelley Blue Book and Autotrader. “But as the current controversies surrounding the Renault-Nissan-Mitsubishi alliance prove, collaboration isn’t always easy, and it doesn’t guarantee success.”

Sanford Bernstein auto analyst Max Warburton said evidence suggests that Nissan wanted Ghosn out so that it could gain the upper hand in the alliance.

“It seems Nissan doesn’t want to be controlled by” Renault or Renault’s partial owner, “the French State,” Warburton wrote.

General Motors and Toyota

For about a quarter century, GM and Toyota jointly ran a manufacturing plant in Fremont, California. Toyota wanted to learn the ins and outs of American operations, while GM hoped to learn about Toyota’s efficient manufacturing practices.

Toyota learned some from GM, but GM didn’t learn much, according to a 2009 Harvard Business Review analysis by alliance strategy expert Ben Gomes-Casseres.

And the plant — known as New United Motor Manufacturing Incorporated (Nummi) — never made money.

GM ditched the partnership as part of its 2009 bankruptcy, and Toyota closed the plant.

Soon thereafter, Tesla acquired the factory for a song. And since then, CEO Elon Musk’s company has capitalized on the plant’s infrastructure to become the world’s leading electric vehicle maker.

At least someone got something out of it.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.


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