Bulletin: The Global Alliance Between Ford And Volkswagen: A Good Defense But With Little Impact

NEW YORK (S&P Global Ratings) Jan. 17, 2019--S&P Global Ratings today said that on Tuesday, amid the backdrop of the Detroit Auto Show, Germany-based Volkswagen AG (BBB+/Stable/A-2) and U.S.-based Ford Motor Co. (BBB/Negative/A-2) launched a new global alliance. This partnership will initially focus on engineering, sourcing, and building commercial vans and mid-size pick-up trucks for the European, South American, and African markets starting in 2022. We currently view the announcement as credit neutral. At this early stage, the alliance appears to be a strategically defensive move to share vehicle architecture-related expenses in an attempt to offset the intensifying competitive pressures and escalating costs facing the auto industry over the next decade. Specifically, these challenges include tightening emission regulations, excess manufacturing

...NEW YORK (S&P Global Ratings) Jan. 17, 2019--S&P Global Ratings today said that on Tuesday, amid the backdrop of the Detroit Auto Show, Germany-based Volkswagen AG (###+/Stable/A-2) and U.S.-based Ford Motor Co. (###/Negative/A-2) launched a new global alliance. This partnership will initially focus on engineering, sourcing, and building commercial vans and mid-size pick-up trucks for the European, South American, and African markets starting in 2022. We currently view the announcement as credit neutral. At this early stage, the alliance appears to be a strategically defensive move to share vehicle architecture-related expenses in an attempt to offset the intensifying competitive pressures and escalating costs facing the auto industry over the next decade. Specifically, these challenges include tightening emission regulations, excess manufacturing capacity, and higher costs associated with the electrification of vehicle powertrains. Additionally, the development of mobility services and...

Bulletin