Volkswagen, Ford consider building vans in Turkey

DETROIT

Volkswagen AG and Ford Motor, automotive giants who have decided to team up on vans, pickups and self-driving technology, can use plants in Turkey for joint production, according to remarks made on Jan. 15.

As part of the partnership, building vans in Ford’s Turkey plant is an option, Volkswagen Chief Executive Herbert Diess told reporters at the Detroit auto show.

Ford Otosan is a joint venture between Ford Motor and the Turkish conglomerate Koç, with each holding 41 stakes in the carmaker.

The company has three factories, namely Kocaeli, Gölcük and Yeniköy.

Ford Otosan’s share in Turkey’s commercial vehicle production is 67 percent while it accounts for 72 percent of the country’s commercial vehicle exports, according to the information on the company’s website. It is Europe’s largest commercial vehicle producer and the global hub for Ford Trucks (heavy trucks) and related powertrains.

The carmaker’s production capacity was 440,000 units in 2017 and its revenues were $6.9 billion.

“It is no secret that our industry is undergoing fundamental change, resulting from widespread electrification, ever stricter emission regulation, digitization, the shift towards autonomous driving, and not least the changing customer preferences,” he said.

“Carmakers around the globe therefore are investing heavily to align their portfolios to future needs and accelerate their innovation cycles,” he added.

A deal centered around vans and pickups had been expected. Investors are now focused on the potential for additional deals they believe could offer greater savings.

The expanding alliance, which will be governed by a joint committee that includes the CEOs of both companies, highlights the growing pressure on global automakers to manage the costs of developing electric and self-driving vehicles, as well as technology to meet tougher emissions standards for millions of internal combustion vehicles, they will sell in the coming years.

“You can’t do this alone,” said Ford’s chief executive Jim Hackett.

Ford will provide more details on how the alliance affects Ford’s regional operations in coming weeks, but does not expect any job cuts in its plants as a result of the alliance, he said.

Ford will engineer and build medium-sized pickups for both companies, Volkswagen said. Ford officials said the VW pickups will initially be available only in the South American, European and African markets.

Ford will also engineer and build larger commercial vans for European customers, while Volkswagen will develop and build a city van.

The companies estimate the commercial van and pickup cooperation will yield improved annual pretax operating results starting in 2023.

Ford and VW have signed a memorandum of understanding to jointly develop electric and self-driving vehicles, Diess said. Both executives said they were optimistic those deals would be finalized but provided no timeline.

Sources previously said the framework of such a deal would include VW investing in Ford’s autonomous vehicle operations, including its Argo AI business, Reuters reported.