If you can't beat them, join them.
General Motors Corp. and Ford Motor Co., for generations cutthroat rivals vying for share of the U.S. car industry, are
reportedly
in talks about collaborating to develop new engines and powertrain
technologies. GM according to a report in the Detroit News approached
Ford more than a month ago, offering access to the technology behind
its much-hyped Volt electric car if Ford was willing to combine some
R&D efforts.
Obviously a lot has happened since the days when GM and Ford
ruled the U.S. auto scene, and with both companies losing billions this
year and falling further behind foreign rivals in the sale of smaller,
more fuel efficient cars, a joint venture might make sense.
According to the report, developing a new engine can cost upwards of $1
billion, while a new transmission can easily cost $800 million, expenses
that might be easier for investors to swallow if shared among multiple
partners.
A final agreement remains uncertain. Some inside Ford initially were
reluctant, feeling the automaker has drawn the short end of past
collaborations with GM. But the company's board has approved
negotiations, and Ford head of powertrain operations Barb Samardzich
has met with counterparts at GM at least three times to discuss how a
joint venture would be structured.
It is going to take a lot more than an engine joint venture to get
Ford and GM back on their feet. But in a year where little has gone
right for the automakers, any step in the right direction is
welcome news.
-- Lou Whiteman
See Detroit News story on the potential joint venture
See TheDeal.com story on GM's $15.5 billion second quarter loss
See TheDeal.com story on Ford's $8.7 billion quarterly loss
See Dealwatch: Autos
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