Ford and Volkswagen have agreed to co-operate on the development of vans and pickup trucks in a bid to reduce costs.
The two companies said they would also look into co-operating on developing electric and self-driving cars, reports BBC.
Sales from the partnership will begin in 2022 and will boost profits from 2023, the carmakers predict.
“Over time, this alliance will help both companies create value and meet the needs of our customers and society,” Ford boss Jim Hackett said.
The deal is not a merger and the companies will not own any shares in each other, the two said as they announced the deal at the Detroit motor show.
The joint projects will be overseen by a committee including Mr Hackett and Volkswagen chief executive Herbert Diess.
The companies expect demand for commercial vans and medium-sized pickup trucks to grow, and sharing van designs will save them money “while maintaining distinct brand characteristics”.
Ford will design and build medium-sized pickups for both companies and larger commercial vans for European customers, while Volkswagen is to design and build a smaller van.
Carmakers are under pressure to develop cleaner vehicles amid concern over the health risks associated with diesel vehicles.
Older firms such as Ford and VW are also being forced to catch up with newer, tech-focused firms such as Uber and Tesla in developing self-driving and electric cars.
Volkswagen yesterday said it would invest $800m to fit out its car plant in Chattanooga, Tennessee to make electric vehicles.
Combining its financial muscle with Ford in developing the technology could help to increase profits.