Filed under: Deals, Industry, Competitive strategy, Ford Motor (F)
Nissan and Chrysler will start to build full-sized pick-ups together. According to The Wall Street Journal, “Chrysler will start building a huge pickup for Nissan at its truck plant in Saltillo, Mexico.” Nissan will also build some small automobiles 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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