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Honda Motor Co. and General Motors Co. lay the groundwork for a deeper partnership in North America to jointly develop gasoline engines and crossover SUVs, seeking to reduce costs as the automotive industry moves into electric vehicles.
The two automakers signed a non-binding MEMORANDUM of Understanding to identify an American automotive alliance, they said on a Thursday. While each manufacturer will sell cars under its own U. S. and Japanese brands, corporations will cooperate in spaces such as portions and materials, studio activities, and hooked automotive services.
It marks a major step in integrating operations with two of the world’s largest automakers, situations are still in progression, and the two corporations do not plan to reconcile capital. connected technologies and kept auto and truck companies at the same level.
“This partnership will drive investments in long-term mobility inventions by freeing up more resources,” GM President Mark Reuss said in a statement.
GM and Honda plan to jointly expand at least 4 crossover SUVs for the North American market, releasing cash for battery-released cars. GM plans to sell 20 electric cars internationally until 2023 and Honda will expand two rechargeable models, the Detroit automaker’s Ultium battery.
“This is a first step for them to see if their partnership will create more synergies,” said Takeshi Miyao, Carnorama analyst in Tokyo.
If the collaboration goes as promised, analysts say the association can bring GM and Honda closer together in terms of engineering integration and eventually lead the two corporations to take minority stakes in others.
There is a precedent for this, as Honda already has a minority stake in Cruise LLC, GM’s self-employed company. Two years ago, Honda pledged to invest $2. 75 billion (approximately 292 billion yen) for 12 years in the company.
Although geographically in North America, the alliance represents a high-risk bet, as crossover SUVs account for most of the sales of any of the car manufacturers in this highly successful region.
“GM and Honda are on a progression that can be a very big problem,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Looks like he’s moving towards something bigger. “
Closer collaboration to conserve capital occurs when electric car leader Tesla Inc. it has benefited from increased demand for its actions and several new newly listed electric vehicle companies have captured the imagination. Investors.
Over the past decade, automakers have forged close partnerships to help manage generation progression costs. Ford Motor Co. , and Volkswagen AG have joined forces to expand electric cars and autonomous cars.
GM and Honda will also face primary partnerships, adding the fragile alliance between Nissan Motor Co. , Renault SA and Mitsubishi Motors Corp. They will also face the combined strength of Peugeot owner PSA Group and Fiat Chrysler Automobiles NV, who plan to merge. next year.
The balance sheet of mergers and joint ventures in the automotive sector is under stress due to the demanding cultural and engineering situations that accompany the twinning of remote companies with different logo identities.
The Renault-Nissan alliance has been in trouble since former president of the two companies, Carlos Ghosn, was arrested in 2018 for corruption and dismissal. Daimler AG’s acquisition of the former Chrysler Corp in 1998 failed and the Germans sold it to a personal equity fund. Cerberus Capital Management, which led to its bankruptcy.
GM failed in its mergers with the Italian company Fiat prior to the formation of Fiat Chrysler Automobiles, as well as with a trio of Japanese automakers: Isuzu Motors Ltd. , Suzuki Motor Corp. and Subaru Corp. , when it became known as Fuji Heavy Industries. The most recent agreement with Peugeot has also resulted in a depreciation of GM’s investment and some joint projects to be demonstrated.
Honda has avoided close partnerships and sought fierce independence, but has worked with GM for more than seven years on the progression of mobile hydrogen fuel systems.
GM and Honda would possibly be more willing to include a broader diversity of technologies through accepting as true with their existing cooperation efforts on diversity and fuel cells, Schuster said.
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