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jasonj80

Volkswagen says it may use Ford's U.S. manufacturing capacity

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Hm.  The only US Ford plant that really has any capacity is Flat Rock, right?

Well, and I guess MAP - which a potential Amarok could be that mystery 3rd vehicle (not that VW negotiations were going on back when that was rumored)?

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Well there you go, exactly what I was hoping would happen between Ford and VW.

Ford still has spare capacity at all of its North American plants except for Dearborn and Kentucky Truck.  Ford recently cut shifts at Louisville and the long suffering FlatRock plant.  Wayne is only running one shift for Ranger and their Mexican facilities are getting some lower volume products like Mach-E, Maverick, and the new compact pickup/utility.  Oakville is also running fairly light with only Edge and Nautilus going forward.

I have LONG advocated for cooperation with VW, although alliances rarely seem to work out longterm.  But if it HAD to happen, Ford and VW are perfect fits.  I see less benefit in a shared US alliance, but there is massive synergy in Europe and Ford needs a ton of help in China where VW dominates and Ford is absolutely lost.   

Edited by Assimilator

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I also wonder if this is a card in case the Ford Family wants out if the restructuring doesn't work the right way; they sell to VW keep a chunk of the new VW company and are done. 

Edited by jasonj80

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I think the fact that VW is far more interested in gossiping about it than Ford is interesting and a little concerning.  But that concern isn't related to a sale of Ford.  VW still doesn't have an impressive balance sheet despite it's size compared to Ford.  Maybe VW sees this as a way to improve that position, both of which would benefit.

Edited by Assimilator

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33 minutes ago, Assimilator said:

I think the fact that VW is far more interested in gossiping about it than Ford is interesting and a little concerning.  But that concern isn't related to a sale of Ford.  VW still doesn't have an impressive balance sheet despite it's size compared to Ford.  Maybe VW sees this as a way to improve that position, both of which would benefit.

My guess is to get investors to pressure Ford into doing it.  They know Ford stock has not been a boon and the investors are restless.  Anything that promises better returns will get them frothing at the mouth for action.

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I shudder to think how some of the higher seniority union members will react to that....

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40 minutes ago, fuzzymoomoo said:

I shudder to think how some of the higher seniority union members will react to that....

Why would they care about which badge is on the grille if they get to keep working?

I don't think VW is really going to come in and take over managing the plant. It will still be a Ford factory and UAW shop. And most likely they will be building Ford version of the same vehicle anyway - i.e. if rumor is right that VW will basically rebadge Ford light commercial vehicles, Ford will just be building VW version of Amarok and Transit in its US factories.

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17 minutes ago, bzcat said:

Why would they care about which badge is on the grille if they get to keep working?

I don't think VW is really going to come in and take over managing the plant. It will still be a Ford factory and UAW shop. And most likely they will be building Ford version of the same vehicle anyway - i.e. if rumor is right that VW will basically rebadge Ford light commercial vehicles, Ford will just be building VW version of Amarok and Transit in its US factories.

Some of the people who have been around a while are very closed minded. 

Im also thinking of a few specific stories of some of the bullshit people would pull with the Mazdas at Auto Alliance before it became Flat Rock Assembly. 

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57 minutes ago, fuzzymoomoo said:

Some of the people who have been around a while are very closed minded. 

Im also thinking of a few specific stories of some of the bullshit people would pull with the Mazdas at Auto Alliance before it became Flat Rock Assembly. 

Cutting off your nose to spite your face.

Those are the folks that give unions a bad rep.

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Vw wants access to suv's and trucks.(there products suck).....to get it they may just buy ford.....

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46 minutes ago, fordmantpw said:

Cutting off your nose to spite your face.

Those are the folks that give unions a bad rep.

There's a lot of that these days. See: UAW/FCA kickback scandal. 

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But, but, but.... Ford has to cut automobile production because they don't have capacity. Right? 

Now.... They have excess capacity to produce Volkswagens? 

 

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https://www.autoblog.com/2018/12/04/vw-ford-us-car-plants/

Diess said VW would not take an equity stake in Ford as part of its alliance. "We are building an alliance with Ford which will strengthen Ford's position in Europe because we will share platforms," he said.

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Are Atlas and Passat using all the capacity at the Chattanooga plant?  I have a hard time seeing VW needing more capacity in North America. 

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9 minutes ago, ehaase said:

Are Atlas and Passat using all the capacity at the Chattanooga plant?  I have a hard time seeing VW needing more capacity in North America. 

It makes sense if they want to bring Amarok here to avoid the chicken tax. Beyond that maybe it's just to safeguard against future tariffs?

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6 hours ago, Assimilator said:

 

Ford still has spare capacity at all of its North American plants except for Dearborn and Kentucky Truck.  Ford recently cut shifts at Louisville and the long suffering FlatRock plant.  Wayne is only running one shift for Ranger and their Mexican facilities are getting some lower volume products like Mach-E, Maverick, and the new compact pickup/utility.  Oakville is also running fairly light with only Edge and Nautilus going forward.

And your basing this on what?

Wayne is getting the Bronco which should make the plant run at at least 225K units a year, even more if VW wants its pickup there.

Flat Rock is supposed to get AV production and looks to be the leading site to get the Transit Connect for NA for that purpose

Maverick should sell around 100K units a year in NA at least-the Compact Pickup and Utility won't be a huge player in the NA market, but will sell well in SA. Don't discount the possibility of Escape overflow either.

I don't see any huge changes in Ford plants going forward product wise-all your going to see in NA is Ford rebranded products as VW coming down the same production line. 

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All of these plants are capable of 300,000 units a year with 3 shifts which is not what they are running at.  Remember they just cut a shift at the Escape plant, there is no danger of overflow production needed for a number of reasons (increased competition and product diversity within Ford, slowing car market, increasing prices).  Remember Escape sales are dropping like a rock despite the loss of their car business. 

Ford is scaling back on Escape and Explorer production intentionally to focus on profitable sales, especially as they head into the new models which will command higher pricing.  I'll post Hackett's warning below.

FlatRock will be losing Continental at the same time it gains the Transit Connect which is a relatively low volume product, maybe 6K units/month at best.  Mustang is also facing a number of years of stagnant or declining sales as the segment grows stale before it transitions with new technologies.  

Maverick is a MUCH lower volume product than the Fusion it's replacing, same with Mach-E replacing Fiesta.

Ford just has a ton of empty floorspace opening up as it moves to lower volume sales in favor of margin rich products, you have to remember how much of their sales have shifted to fewer nameplates.  I still think Ford will shutter a North American plant in its restructuring, I don't know how they avoid it.  

 

Quote

Behind The Numbers:

Ford’s U.S. sales were down 6.9 percent in November, but as you may recall I mentioned in last month’s column that we would see some downward pressure on sales as we close out the year due to a decline in daily rental sales based on order timing – daily rental sales were down 32.7 percent for the month. In addition, we are also beginning our transition out of cars and into SUVs and trucks, which placed some weight on November sales, as we continue to sell off remaining inventory of vehicles like the Focus and C-MAX. We are setting up for a transitionary period that will make things a little dicey over the next nine months, as we will also be discontinuing Taurus and Fiesta next year while managing our transition to the all-new Escape and Explorer.

Here is how November unfolded.  

F-Series marked its ninth consecutive month topping sales of 70,000 trucks. That’s something we’ve never done before. It’s a record for F-Series and really speaks volumes about Ford’s consistent performance in the pickup truck segment. F-Series is a high-volume, high-margin product, with no one else in the industry coming close to accomplishing this kind of consistency at these volumes. We sold just over 72,000 trucks in November, putting us in a good position to hit the 900,000-truck mark for the year. F-Series will be the best-selling pickup truck for the 42nd straight year and the best-selling vehicle for the 37th consecutive year when we close out 2018. We lead Chevrolet’s Silverado by more than 300,000 trucks. What’s more, transaction prices for F-Series continue to operate at near-record levels at $47,000 per truck, which is $1,800 higher than the segment average.

Ford brand SUV sales are up 0.8 percent year to date – up from the record levels we set last year. Expedition sales were up almost 8 percent in November, with vehicles selling at more than $61,000 per truck. Escape and Explorer sales were down as we manage inventories leading up to the plant changeovers next year for the new models. It will be critical that we properly manage inventories, along with incentive spend and leasing on both vehicles. Allow me to explain. Sales could be better if we were to do more on the incentive front and effectively push down average transaction pricing. The problem with taking this approach is that it makes for a cheaper Escape and Explorer at a time when we will be introducing new models – both of which will command stronger pricing – making for a stark pricing contrast at launch of the all-new products. If we work to lease more Escapes and Explorers now, they eventually come back to dealer lots and dampen residual values. The strategy is effective in the short-term, but it hurts the customer long-term and our ability to maintain sales and pricing long-term.  

Van sales were down mainly due to the timing of daily rental orders. That said year-to-date sales of the Transit are up 10 percent through November. Building on October’s momentum, retail sales of the all-new Transit Connect were up 17.2 percent last month. Transit Connect has always been popular with small businesses but we could be seeing the beginning of more retail customers looking for an economical and efficient people-mover. Transit Connect scores big on this front.  

As I mentioned earlier, we will continue to see cars place some downward pressure on sales in the near term as Focus and C-MAX wind down and we exit Fiesta and Taurus next year. Expect to also see daily rentals continue to weigh sales down as we close out the year. As we move into 2019, it’s going to be important to keep a watchful eye on Explorer and Escape. We need to manage our inventory, lease penetration and incentive spend very carefully as we head into the launch of the all-new models next year. 2019 will be an important year as we make the transition into trucks and SUVs and position Ford for future growth into the next decade. Incredible that we are talking about the next decade, but it is just slightly over 12 months away.

 

Edited by Assimilator

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10 hours ago, ehaase said:

Are Atlas and Passat using all the capacity at the Chattanooga plant?  I have a hard time seeing VW needing more capacity in North America. 

They could be planning to build a Passat-based replacement for the Fusion with Ford's badge.

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9 hours ago, silvrsvt said:

all your going to see in NA is Ford rebranded products as VW coming down the same production line. 

Maybe any eventual extra capacity at Ford's plants will be absorbed by VW demands on trucks, vans and even SUVs

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15 hours ago, ehaase said:

Are Atlas and Passat using all the capacity at the Chattanooga plant?  I have a hard time seeing VW needing more capacity in North America. 

VW has two MQB plants and one MLB plant in North America: Chattanooga (Passat, Atlas, upcoming Crosslbue coupe and Tanoak pickup) and Puebla (Jetta, Tiguan) are MQB and Audi's San José Chiapa plant is MLB (Q5).

Their plan for after 2021 is to convert one of the MQB plant to MEB to make electric cars. The odds on favor is Puebla, which means VW will have to eventually move Jetta or Tiguan or both to somewhere else. Also, VW has been on the record that they are evaluating entering US "commercial" vehicle markets. If they do, they will probably need to build Amarok and a van or two in the US, Canada, or Mexico to avoid chicken tax.

 

 

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If the presumptions of this Ford/VW alliance being about commercial products are correct, I'd guess they're thinking about the Transit line at KCAP or adding product at Avon Lake. IIRC, DTP and KCAP are producing roughly equal numbers of F150s, so I don't see how they could go there, nor could they go to KTP, which seems to be running hard with Super Duties and Expeditions/Navigators. 

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On 12/4/2018 at 8:30 PM, 351cid said:

But, but, but.... Ford has to cut automobile production because they don't have capacity. Right? 

Now.... They have excess capacity to produce Volkswagens? 

That's according to VW, not Ford.

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Any news on the european side of the story? What are the expected changes? 

I wonder if this partnership could help taking Lincoln across the pond, especially to save plants from being axed (not to mention improve profitability)

Edited by passis

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5 hours ago, passis said:

Any news on the european side of the story? What are the expected changes? 

I wonder if this partnership could help taking Lincoln across the pond, especially to save plants from being axed (not to mention improve profitability)

I don't think you would see Lincoln "across the pond" any time soon....Ford has the Vignale trim line that effectively takes a Ford product into Lincoln territory levels of comfort and convenience. If Lincoln were to make a move into Euro markets, it would likely come from any production in China.

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