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By Stephen Wilmot
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 16, 2019).
Sharing assets with a competitor turns out to be every bit as hard as it sounds.
As the Renault- Nissan alliance frays following the arrest of its champion Carlos Ghosn, Ford Motor and Volkswagen are looking for ways to forge their own "global alliance."
After at least seven months of talks and hype, however, the two companies haven't agreed on anything that touches core strengths -- American pickup trucks for Ford, European and Chinese cars for Volkswagen -- or even areas of intense strategic focus such as electric vehicles and driverless technology.
The deal they announced Tuesday instead centers on light trucks outside North America and vans in Europe. Reflecting their different strengths, Ford will develop and build medium-size pickups and larger vans, while VW will make smaller vans. Even though these vehicles will be built on the same platform by the same company, they won't be identical and will be sold under their distinct VW and Ford brands.
This follows the Renault-Nissan model for sharing costs without actually merging. The difference is that Ford and VW aren't planning to swap shareholdings, as Renault and Nissan did.
As far as it goes, the VW-Ford arrangement is welcome in an industry plagued by excess capacity. But it doesn't solve either company's key problems: Ford's money-losing European car business; VW's money-losing U.S. operation; Ford's lack of effective electric-vehicle strategy; and VW's lack of effective driverless-car strategy.
The promise is that the alliance could grow to cover at least some of these areas. The two companies said Tuesday they had signed a "memorandum of understanding" to investigate ways to collaborate on electric and driverless technology. VW has invested heavily in an EV platform and is prepared to share it, said brand boss Herbert Diess.
That could help shift the benefits back toward Ford. Right now VW, whose van operation is too small to compete, seems likely to benefit more than its U.S. peer, which already is the market leader in European vans and could thrive on its own.
The companies' failure to agree on terms of a wider-ranging collaboration is, like the recriminations that have soured Renault's and Nissan's unequal marriage, a warning flag. Meaningful automotive alliances are easier said than done.
