GM, Honda to form North American auto alliance

TOKYO – General Motors and Honda Motor Co. said Thursday that they have signed a memo of understanding to form a North American automotive alliance that may include a range of vehicles sold under both brands and further cooperation in purchasing, r&d and platforms.

Under the non-binding agreement, co-development of common platforms, including for electrified and internal combustion vehicles, will begin in early 2021.

The agreement builds on a partnership announced in April, in which GM will help develop two new electric vehicles for Honda that will be powered by GM’s upcoming Ultium batteries.

Honda, a middling sized player on the global field, has been gradually expanding its cooperation with GM in recent years, amid a rush toward consolidation among some rivals.

GM earlier this year pledged US$20 billion toward EV and autonomous vehicle development through 2025. It plans to launch 20 EVs globally by 2023 and says Cadillac, its lead EV brand, will have a fully electric lineup within the decade.


“This alliance will help both companies accelerate investment in future mobility innovation by freeing up additional resources,” Mark Reuss, president of General Motors, said in a joint statement.  “Given our strong track record of collaboration, the companies would realize significant synergies in the development of today’s vehicle portfolio.”

Honda spokesman Koji Watanabe said the agreement does not entail a capital alliance or purchase of shares. The objective, he said, is to raise the efficiency of operations in North America and a capital tie-up was not deemed necessary to achieve that.

In recent years, Honda has routinely rebuffed suggestions it needs a capital alliance with another player to leverage scale, saying it prefers loose alliances centered around product.

Under the proposed alliance, Honda and GM would collaborate on a variety of segments for the key North American market. The companies will also coordinate on new technologies, vehicle platforms,

connectivity, propulsion systems, joint purchasing and manufacturing, they said. Purchasing collaboration, for example, would target materials, logistics and localization strategies, the companies said.

Many details of the partnership, such as what vehicles will be targeted first, when the first jointly-developed vehicles will come to market or estimates on potential synergies, have yet to be decided, Watanabe said.

“Through this new alliance with GM, we can achieve substantial cost efficiencies in North America that will enable us to invest in future mobility technology, while maintaining our own distinct and competitive product offerings,” Honda Executive Vice President Seiji Kuraishi said.

GM has shifted its portfolio in recent years, focusing on large, profitable pickups and SUVs to fund EV development. The automaker took a number of cost-cutting actions this year to weather the coronavirus pandemic, such as narrowing vehicle configuration options and delaying facelifts, but GM said its EV production and planning remained on track.

Savings are expected through the combined scale of the two companies, which are among the continent’s biggest-selling car manufacturers.

Hannah Lutz contributed to this report.


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