GM and Honda to Forge Strategic Alliance in North America

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A General Motors employee works December 13, 2019 at the automaker’s plant in Wentzville, Missouri.Photo by Melissa Vaeth for General Motors

General Motors and Honda Motor have signed a non-binding memorandum of understanding to establish a North American automotive alliance that includes collaboration on future vehicles and sharing of purchasing costs.The companies said they would immediately start planning for the new vehicles, with engineering work scheduled to begin in early 2021.

The alliance, according to the companies, will include a “range of vehicles for sale under each company’s separate brands, as well as cooperation in purchasing, research and development and connected services.”

The combined efficiency of the companies should allow the two companies to invest in cutting-edge and next-generation technologies for autonomous and electric vehicles.

“This alliance will help the two companies accelerate investments in future mobility innovation by freeing up additional resources,” GM Chairman Mark Reuss said on Thursday.

The announcement did little for shares of Honda and GM, both of which were trading below 1% when the market opened on Thursday.

Reuss said the companies expected “significant cost savings” from the alliance, despite not disclosing any financial information, saying those details would be released when the deal is finalized.

“Through this new alliance with GM, we can achieve substantial savings in North America that will allow us to invest in future mobility technology, while maintaining our own distinct and competitive product offerings,” said Seji Kuraishi, Honda executive vice president, in a statement.

All facets of the alliance will be governed by a joint committee, made up of senior executives from both companies.

The tie-up builds on an agreement announced between the companies in April to jointly develop two new electric vehicles for Honda, based on GM’s upcoming global EV platform and Ultium battery technology. The companies also have partnerships on fuel cell technologies, batteries and the majority subsidiary of GM Cruise, of which Honda is the minority owner following a $ 2.75 billion investment announced in 2018.

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