Nissan and Chrysler will begin to build full-sized pick-ups together. According to The Wall Street Journal, "Chrysler will start building a large pickup for Nissan at its truck plant in Saltillo, Mexico." Nissan will also build some small cars for the US company.
The deal allows both companies to increase output from some of their plants, making more efficient use of manufacturing facilities and the arrangement could also cut design costs for the two automakers.
The new partnership raises the question of whether embattled Ford (NYSE:F) should do the same thing. Ford's shares trade between $6 and $7 most days, about where they were when there were rumors of Chapter 11 two years ago. Ford now has only about 15% of the US market, and, if that share falls more, it has to raise the question of how viable it is for Ford to "go it alone" in the US market.
Ford could turn to several partners, but the most obvious one is Volkswagen. VW has said that it wants to expand into the US market and has had little success here. Since Ford losses money on many of its smaller cars, an area where VW is strong, it may make sense for Ford to take VW-produced cars for its domestic dealers and have a piece of a profitable joint venture instead of losing billions on its own.
At the end of the day, Ford has to do something.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
4-15-2008 @ 2:38PM
Micro1234 said...
Seems like blogger wrote this in about 10 minutes. Good job phoning this one in. Chrysler is doing this due to desperation, nothing else. Nissan can't rationalize continuing to build a full size pickup that is capable of only selling 50K per year. Armada is being dumped in near future so they now have a whole plant with nothing to build. Now they will enter the commercial truck market. Chrysler has nothing to offer in the small car arena at a time that it is the hottest segment in a dead overall market. Their only option in the near future was a Chinese import from Chery which was also thought up out of desperation. Chrysler spent so much money building 20 different models of the same thing(Nitro, Compass, Patriot) that nobody wanted that it has left them no monies to design and build a competitive B car entry. Ford is on the cusp of turning the corner, the last thing they need is to link up with a mid to lower pack(quality-wise) manufacturer like VW. Ford will very soon be able to announce they are the quality leader in the U.S.. The last thing they need to do is link up with someone and share a plant and give away their "secret software" that has allowed them to leap to the top of the quality race. If VW were to get a hold of it they may very well turn around and sell it to Toyota. In two years time, the Focus and Fiesta will reign supreme in the sub-compact segment and sale with profits to boot. Ford just needs to stay the course and all will be fine. Chrysler as one knows it today is gone within 3 years anyway. Once Cerebrus finds a company stupid enough to fork over some money for the Jeep brand, the slice and dice fest will begin. Ford unleashed Land Rover just in time. The SUV, at any price range, is coming to an end. Fortunately, Ford has quality product in the CUV and car lines to keep them in the market. Chrysler does not, and GM has only the Malibu on the car side. Toyota is starting to look vulnerable with 7 of the last 9 months showing decreased sales. Focus is on fire, Corolla not so much. Escape, Mariner, and Tribute are steadily increasing each month. Taurus is best car in a dead segment (D cars), Fusion still posting year over year increases going on 4 years old. Flex, high profit, potential monster hit months away, MKS high profit white space entrant for Lincoln. F-series rebates to drop at end of year due to new design. Ford is fine just where they are.
4-15-2008 @ 7:59PM
jpdr1100 said...
I like the idea of a VW-Ford tie up. VW is weak on trucks, Ford is weak (in the US) on small cars. Not sure how this would play with Ford's world-wide position, since they own Mazda and have a good car line-up in Europe.
It beats VW getting in bed with Chrysler.
4-16-2008 @ 6:27PM
MasterCKO said...
yeah, I'm gonna have to agree with Micro1234 on this one. It seems like very little thought was actually put into this article.
btw, F was up to 10 not so long ago and looks poised to make it's way back up there and beyond going forward.
Besides all the things that Micro1234 listed, there's also the concrete timetable to globalize platforms and manufacturing (the lack of which is currently a major impediment to their profitability) by 2009 (IIRC) that was just officially announced.
Also, there's their new (pretty compelling IMO) "Drive one" marketing campaign that looks to really shake off some of the negative branding in the consumer market for FoMoCo, and indications seem to show that F's market share is increasing, not decreasing.
a F-VW tie-up, while a fascinating thought experiment, is far from necessary or advised as you insist here.
4-18-2008 @ 3:12PM
luke said...
The news here in Asia is that a VW takeover is already underway and will be announced in the next two weeks. It was reported a week ago that a major China player was in talks with Ford earlier in the year but the talks were discontinued due to anti-sino sentiment in the US. With the recession in the states and plummeting auto sales the industry will have to follow suit with the airlines just to remain viable. It would make sense for Ford financially but the struggle is getting Americans comfortable with the idea that their reign as the only super power has come to an end. Globalization doesn't just benefit America; it brings unilateral dominance to an end. New World-New Leaders-New Companies