Ford and Volkswagen announced details of a new alliance on Tuesday as the two car companies look to cut the cost of the technological revolution now shaking the industry and deal with slowing sales.
The companies will start with the development of commercial vans and mid-size pickups but the alliance will also involve sharing resources on autonomous vehicles, mobility services and electric vehicles. Car manufacturers are now competing with cash rich tech companies including Google as technology redefines transportation.
The alliance would be the largest of its kind in the industry and comes as both companies have struggled. This month, Ford announced it was cutting thousands of jobs in Europe and closing plants. Its European sales fell 2.3% in the first 11 months of last year.
Ford will not leave Europe as General Motors did in 2017, when it sold Opel and Vauxhall to PSA Group, owners of Peugeot and Citroën.
Volkswagen, meanwhile, has its own issues and sales have been hit by “dieselgate” – the revelation that VW executives had gamed emission tests by installing illegal software in 11m diesel cars.
Both companies have been hit by falling sales of diesel vehicles and by a slowdown in the Chinese market, the world’s largest, where car sales recently fell for the first time in 20 years. Analysts are also expecting the US market to contract over the next two years after several years of growth.