Fordvergngen: What Would a Ford/VW Merger Look Like?

Back in June, we brought you news that Ford Motor Company and Volkswagen AG seemed to be working on a relationship — potentially yielding jointly developed products aimed at the commercial sector. At the time, both companies issued a joint memorandum of understanding about potential product alliances.

With the Blue Oval’s stock price in the dumpster, Jim Hackett constantly nattering about “fitness,” and VW’s desire to increase its market share in America, it wouldn’t be the oddest of marriages if these two companies joined forces in more than just the commercial market.

Stranger things have happened … like DaimlerChrysler. Wait, that’s probably a bad example.

Sure, a mashup of the world’s biggest and fifth biggest automakers would create a juggernaut unlike anything the world has ever seen.

It makes more than a lick of sense. Ford’s jumping out of the car game, a segment in which VW is flush with product. Volkswagen’s cupboards are pretty bare when it comes to pickups and other gonzo-sized (and gonzo-profit) machines, but the Glass House is stuffed with the things. Between them both, they’d have all segments covered like syrup on waffles.

Over at the Detroit Free Press, talking heads are making some good arguments.

“Something big is brewing,” said John McElroy, Autoline.tv host and longtime industry analyst. “Look, if it isn’t, (Ford CEO) Jim Hackett can’t survive. He has got to drop a bombshell on the industry.”

He goes on to point out that the average consumer – not gearheads like those reading and writing for this site – don’t know and in fact don’t care what’s under the hood of their ride. Do you really think that South Street Sally would be concerned if that’s a Ford-developed or VW-engineered transmission in her crossover, so long as it works?

For further on-paper rationalization of this tie-up, look towards China. VW, or a VW-related entity, is responsible for nearly one out of every six cars sold in that country. Even with rumblings of a sales downturn, China is hardly a market that can be ignored. Here in the States, Ford is said to make nearly 40 percent of full-sized pickups purchased. Both companies would love to get their proverbial lug nuts on each of those numbers.

Of course, any talk of a merger between two large automakers calls to mind the beast that was DaimlerChrysler. What seemed to be like a good idea at the time quickly gave way to massive internal culture clashes and the feeling that, ja, the Germans did own the place, not the Americans.

Your author recalls reading stories from insiders at the time. Bud Liebler recalled a top-brass exec from Germany looking at the top floor of Chrysler HQ in Auburn Hills, gazing at the Pentastar-shaped window and saying “that’s got to go.” He was quickly informed that it wasn’t going anywhere since it was, y’know, structurally holding up the building. Another great rumour is that Schrempp allegedly turned off the sprinklers in his office so he could smoke cigars, flying in the face of Chrysler’s no smoking policy. A fascinating read about the culture clashes, with stories straight from the like of Liebler and Bob Lutz, can be found here.

When participants in a megamerger don’t share values, major problems can rear their ugly head. If working styles and assumptions are vastly different from the get-go, it’s monumentally difficult to align them after the fact given that humans are humans and often don’t like change.

Sharing vehicle platforms and powertrains is key to saving mass amounts of money and realizing efficiencies in today’s environment. The late Sergio Marchionne expounded on this point many, many times – to the point where he appeared to make active overtures of a merger towards outfits like General Motors. The man had a point, but no one was willing to be FCA’s dance partner.

It was two decades ago this year Chrysler and Daimler entered into a “merger of equals” that largely turned out to be anything but. Would it be different for Ford and VW?