Volkswagen AG and Ford Motor Company today announced the first formal agreements in a broad alliance that will include the development of commercial vans and medium-sized pickups for global markets beginning as early as 2022.

The companies estimate the commercial van and pickup cooperation will yield improved annual pre-tax operating results, starting in 2023.

In addition, Volkswagen and Ford have signed a memorandum of understanding to investigate collaboration on autonomous vehicles, mobility services and electric vehicles and have started to explore opportunities. Both companies also said they were open to considering additional vehicle programs in the future.

“Over time, this alliance will help both companies create value and meet the needs of our customers and society,” said Ford CEO Jim Hackett. “It will not only drive significant efficiencies and help both companies improve their fitness, but also gives us the opportunity to collaborate on shaping the next era of mobility.”

Volkswagen CEO Dr. Herbert Diess added: “Volkswagen and Ford will harness our collective resources, innovation capabilities and complementary market positions to even better serve millions of customers around the world. At the same time, the alliance will be a cornerstone for our drive to improve competitiveness.”

The alliance, which does not entail cross-ownership between the two companies, will be governed by a joint committee. This committee will be led by Hackett and Diess and will include senior executives from both companies.

Ford's and Volkswagen's collective light commercial vehicle volumes from 2018 totaled approximately 1.2 million units globally.

Demand for both medium pickups and commercial vans is expected to grow globally in the next five years. The alliance will enable the companies to share development costs, leverage their respective manufacturing capacity, boost the capability and competitiveness of their vehicles and deliver cost efficiencies, while maintaining distinct brand characteristics.

Through the alliance, Ford will engineer and build medium-sized pickups for both companies which are expected to go to market as early as 2022. For both parties, Ford intends to engineer and build larger commercial vans for European customers, and Volkswagen intends to develop and build a city van.