Following a meeting at the White House on Tuesday, Volkswagen CEO Herbert Diess stated that the automaker was building an alliance with US auto-giant Ford and use its American plant to build cars.
According to Diess Volkswagen was “considering building a second car plant,” adding, “We are in quite advanced negotiations and dialogue with Ford Corporation to really build up a global automotive alliance, which also would strengthen the American automotive industry.”
According to a research note that was written by RBC Capital Markets analyst Joseph Spak, the new collaboration would further deepen as Diess’s comments suggest that Volkswagen will use some of Ford’s unused capacity. Spak also said that a European or Asian automaker could seek to acquire some of General Motors’ unused capacity. GM announced last week its plans to idle five North American plants.
“VW may have a little-negotiating power as some of the GM facilities could be bought (although this could impact their broader intentions with Ford),” Spak wrote.
Currently, Volkswagen has their own plants in Chattanooga and Tennessee. Commenting on the need for a new plant, Diess said that the company was in “quite advanced negotiations in Tennessee but there might be other options as well”.
Diess stated that VW was not planning to take an equity in Ford as a part its alliance. “We are building an alliance with Ford which will strengthen Ford’s position in Europe because we will share platforms,” he said. “We might use Ford capacity here in the U.S. to build cars for us.”