The automotive industry is marked by fierce competition. However, with automakers forced to balance investments in new technologies such as electric cars (EVs), autonomous cars (VA) and fuel cells with updates to their existing portfolios, collaboration is also essential. Even the world’s largest automakers don’t have enough time to make all the mandatory investments without putting pressure on their profits and money flow.
Some automakers have used mergers and acquisitions to gain scale; in other cases, they have resorted to companies that have full-rule mergers. Last week, General Motors (NYSE: GM) and Honda Motor (NYSE: HMC) announced a broad alliance in the North American market to generate profitability.
Long-time partners
GM and Honda have worked together on projects for more than two decades, however, they have particularly deepened their appointments in recent years.
In June 2018, GM and Honda agreed to collaborate on THE EV batteries, and GM powered Honda’s full EV batteries (using its new Ultium architecture), which Honda would use in the cars it designed.
A few months later, Honda paid $750 million for a small stake in Cruise, GM’s AV subsidiary, and pledged to invest another $2 billion in Cruise for 12 years to finance the progression and commercialization of fully autonomous vehicles. sold several minority stakes in Cruise, Honda is the other automaker involved in this high-potential company.
In April 2020, GM and Honda expanded their collaboration with electric cars. Corporations agreed to jointly expand a couple of new Honda electric vehicle models for the North American market that will be in a position for the 2024-style year. Internal and external design, however, cars will use GM’s new Ultium EV platform and be manufactured at GM plants in North America. They will also come with GM’s OnStar connected service platform.
Expanding the scope of cooperation
At the time of the April announcement, Honda executive Rick Schostek said, “We are in talks with others about the option to further expand our partnership. “GM and Honda announced Thursday the next phase of their collaboration.
The two automakers have signed a Memorandum of Understanding for the percentage of vehicle platforms and propulsion systems common in vehicle segments in North America. They are also contemplating cooperating in the purchase
The main objective of this partnership is cost reduction. By participating in the R
Natural partners
In many ways, GM and Honda are plant-based partners: GM delivered nearly 2. 9 million cars to the domestic market last year, while Honda’s deliveries to the US were in the middle of the world. But it’s not the first time They totaled 1. 6 million cars. Together, they account for more than a quarter of the US market. Giving them a significant advantage over their competitors.
On the other hand, in other spaces of the market. GM’s full-size trucks, SUVs and trucks accounted for more than 40% of its delivery volume in the US. (Almost 1. 2 million vehicles) last year. Honda does not participate in any of the reverses, cars and vans accounted for part of Honda’s volume in the United States last year. GM does not sell vans in the United States and has particularly reduced its car line in recent years, and cars are expected to account for less than 10% of their domestic volume in the future.
GM and Honda remain fierce competition in the crossover market and also compete in medium-sized pickup trucks. These are segments where they can generate really big savings by sharing vehicle platforms and other engineering jobs, because corporations compete particularly in giant portions. of their vehicle portfolios, they have less to worry about sharing generation in overlapping segments.
Close collaboration is essential for the good luck of any primary automotive alliance. The long history of partnership between General Motors and Honda will help in this regard. But it may be several years before investors can assess the effect of this new alliance.