Ford and Volkswagen have reportedly formed a partnership to jointly develop commercial vans and medium-sized pickup trucks as soon as 2022. The brand new partnership is estimated to surge annual pre-tax operating results for both the companies starting from 2023, the companies announced on the second day of the North American International Auto Show.

As per trusted sources, this is the first formal pact within a broad alliance between the two auto manufacturers. The partnership between Ford-Volkswagen will be supervised by a joint committee led by Jim Hackett, CEO of Ford and Herbert Diess, CEO of Volkswagen, cite trusted sources.

Jim Hackett was quoted stating that the companies have also signed a memorandum of understanding to collectively conduct autonomous vehicle research and would consider new vehicle programs in the future.

Hackett further mentioned that he’d like to emphasize simplicity and speed, while both the companies have dedicated a considerable amount of time focusing on how they can collaborate effectively. Although the companies will continue to operate as two separate & rival business entities, Hackett added.

However, the two firms will not be acquiring any ownership stakes in each other like the French automaker Renault did with Nissan in the late 1990s. For years, even though the deal seemed to work well for Renault, it began crumbling post the arrest of Carlos Ghosn, former Chairman of Nissan, which according to some industry executives is politically motivated to take control away from Renault, claim credible sources.

Under the partnership, Ford will develop medium-sized pickup trucks and commercial vans, while VW will manufacture a city van, Hackett stated.

Ford’s medium-sized trucks will be targeted at markets in South America, Europe, and Africa, state sources. The news follows the German automaker’s recent announcement to invest $800 million to begin manufacturing electric vehicle technology in Chattanooga, Tennessee.

For the record, both companies already have well established commercial vehicle businesses. Ford reportedly manufactures the Transit line of commercial vans & the Ranger mid-sized pickup, while Volkswagen manufacturers Transporter, Amarok pickup truck, and Caddy vans.