Why Ford Motor Company (F) Is Worried About VW

This is an enormous undertaking. VW owns a whole series of brands, from Skoda and Seat on the cheap side to Audi, Bentley Motors, and Lamborghini on the high end. Sharing parts, engineering, and major component assemblies across the range presents significant challenges — but it will result in massive savings.

It will also give VW unprecedented flexibility to create and introduce new models on the fly for specific markets — using pre-existing sets of common underpinnings. The strategy isn’t without risk — if a design flaw shows up, millions of cars around the world could be affected — but so far, VW has done a good job of managing that risk.

VW’s goal is to ride this strategy to the title of world’s largest automaker by 2018 — a goal it may beat by several years. It may also end up being the world’s most profitable automaker as well.

That has Ford worried, and it should.

Will Ford and its rivals scramble to catch up?
Last year, General Motors Company unveiled a plan to essentially emulate the globalized “One Ford” approach by the end of the decade. That plan was hailed as a good move for GM at the time. But now the bar is being raised much higher.

Ford has acknowledged that it is benchmarking VW’s modular strategy, as has Toyota Motor Corporation. Among the major global automakers, those two may be in the best position to follow VW’s lead — but if VW’s strategy turns out to be the long-term success that analysts expect, the industrywide rush to emulate it will be on.

The article Why Ford Is Worried About VW originally appeared on Fool.com and is written by John Rosevear.

Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors and owns shares of Ford.

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